# Record and brief — Golden State Transit Corp. v. Los Angeles

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_1045%3A0

## Record

- **Collection:** Supreme Court brief
- **Document type:** Record and brief
- **Published:** January 1, 1989
- **Citation:** 493 U.S. 103

## Text

*
9

No. 88-840-CFX Title: Golden state Transit Corp., Petitioner
Status: GRANTED Vv.
City of Los Angeles

Docketed: Court: United States Court of Appeals
November 16, 1988 for the Ninth Circuit

Counsel for petitioner: Fasman,Zachary D.
Counsel for respondent: Haggerty,John F.

Entry Date Note Proceedings and Orders
1 Nov 16 1988 G Petition for writ of certiorari filed.
2 Dec 16 1988 Brief of respondent Los Angeles in opposition filed.
3 Dec 21 1988 DISTRIBUTED. January 13, 1989
4 Dec 28 1988 X Reply brief of petitioner Golden State Transit Corp. filed.
6 Jan 13 1989 REDISTRIBUTED. January 19, 1989
8 Feb 6 1989 REDISTRIBUTED. February 17, 1989
9 Feb 21 1989 Petition GRANTED. limited to the following question:

“Whether in the absence of a direct violation of a
federal statute, an allegation that a state statute is
preempted a federal statute is cognizable under 42
U.S.C. Section 1983."
4 %½%½%½%½„%„%„%%%%%% %% %%% %%% %%% %%% % „%%% %%%“

11 Mar 7 1989 Order extending time to file brief of petitioner on the
merits until April 22, 1989.

13 Apr 21 1989 Joint appendix filed.

14 Apr 21 1989 Brief of petitioner Golden State Transit Corp. filed.

12 Apr 22 1989 — curiae of American Trucking Associations, Inc.
filed.

15 May 25 1989 Brief amici curiae of Natl. League of Cities, et al. filed.

16 May 25 1989 Brief of respondent Los Angeles filed.

17 Jun 24 1989 Reply brief of petitioner Golden State Transit Corp. filed.

18 Jul 13 1989 CIRCULATED.

19 Jul 20 1989 SET FOR ARGUMENT TUESDAY, OCTOBER 3, 1989. (1ST CASE)
20 Sep 20 1989 Record filed.

* Certified copy of C. A. Proceedings and briefs received.
21 Sep 28 1989 Record filed.

* Certified copy of original record, 5 volumes, received.

22 Oct 3 1989 ARGUED.

~

PETITION
FOR WRIT OF
CERTIORARI

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

GOLDEN STATE TRANSIT CorRP.,
Petitioner,

V.

City oF Los ANGELES,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

ZACHARY D. FASMAN
PAUL, HASTINGS, JANOFSKY
& WALKER
Twelfth Floor

1050 Connecticut Avenue, N.W.

Washington, D.C. 20036
Telephone: (202) 223-9000

Attorney for Petitioner

WILSON - Eras Printing Co., Inc. - 789-0096 - WASHINGTON. D.C. 20001

(i)

114höÿ0ẽ⁵o mu .— &- |

ii

PARTIES TO THE PROCEEDINGS BELOW
All parties to the proceedings below subject to this
petition for a writ of certiorari are set forth in the cap-
tion of the petition.

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..........................................
OPINIONS BELOW a

JURISDICTIONAL STATEMENT...

CONSTITUTIONAL AND STATUTORY PROVI-
SIONS INVOLVED aa

STATEMENT OF THE CASE

REASONS FOR GRANTING THE WRIT

I. REFUSAL TO GRANT A DAMAGE REMEDY
EFFECTIVELY NEGATES THIS COURT’S
DECISION IN GOLDEN STATE TRANS'T
CORP. v. CITY OF LOS ANGELES

II. THE RULING BELOW IS IN DIRECT CON-
FLICT WITH THIS COURT’S INTERPRETA-
TION OF 42 U.S.C. § 1983 AND TACITLY RE-
VERSES THIS COURT’S PRIOR DECISION.

III. THE WRIT SHOULD ISSUE TO RESOLVE
WHETHER SECTION 1983 RELIEF IS AP-
PROPRIATE IN PREEMPTION CASES

CONCLUSION — —

(iii)

Page

13

iv

TABLE OF AUTHORITIES

CASES: Page
Allis-Chalmers Corp. v. Lueck, 471 U.S. 202

12
Baker v. General Motors Corp., 478 U.S. 621

cc T0000 ——T„— 12

Belknap, Inc. v. Hale, 463 U.S. 491 (1983) -..... 9, 12

Bell v. Hood, 327 U.S. 678 (194972 10

Bivens v. Six Unknown Named Agents of the
Fed. Bureau of Narcotics, 403 U.S. 30% (1971) 9
Brown v. Hotel and Restaurant Employees and
Bartenders Int’l Union Local 54, 462 U.S. 191

2 — erecticerenernennttentennemensis enngnibtinn 20, 21
Caterpillar Inc. v. Williams, —— US. ——, 107
xx 12
Chapman v. Houston Welfare Rights Org., 441
e . 20
Charles Dowd Box Co. v. Courtney, 368 U.S. 502
( — 12

Consolidated Freightways Corp. v. Kassel, 730
F.2d 1139 (8th Cir.), cert. denied, 469 U.S. 834

RR . 19
Fort Halifax Packing Co. v. Coyne, —— U.S. ——,

107 8. Ct. 2211 (19877. 12
Golden State Transit Corp. v. City of Los Angeles,

re passim

Golden State Transit Corp. v. City of Los Angeles,
754 F.2d 830 (9th Cir. 1985), rev’d, 475 U.S.
EE Te er nek Le a ee ee passim
Golden State Transit Corp. v. City of Los Angeles,
686 F.2d 758 (9th Cir. 1982), cert. denied, 459

Gs Eee ee passim
Golden State Transit Corp. v. City of Los Angeles,
520 F. Supp. 191 (C.D. Cal. 19817) passim

Gould, Inc. v. Wisconsin Dep’t of Industry, 750
F.2d 608 (7th Cir. 1984), aff’d on other grounds,
A NL RAR SERS oe so 19
Int'l Longshoremen’s Ass’n v. Davis, 476 U.S. 380
rr ( nneeniiaibbiniidasadaiait 12

*

TABLE OF AUTHORITIES—Continued

Page
Kennecott Corp. v. Smith, 637 F.2d 181 (3rd Cir.
. EE sce eB kage Se RA et ee 19
Lingle v. Norge Div. of Magic Chef, Inc., ——
U.S. ——, 108 S. Ct. 1877 (1989)))) 12
Local 174, Int'l Bhd. of Teamsters v. Lucas Flour
lg Gee ie te i 9
Lodge 76, Int'l Ass’n of Machinists and Aerospace
Workers v. Wisconsin Employment Relations
Comm’n, 427 U.S. 132 (1976) passim
Lynch v. Household Finance Corp., 405 U.S. 538
PPP 11
Maine v. Thiboutot, 448 U.S. 1 (198) 19
Marbury v. Madison, 5 U.S. (1 Cranch) 137
„„ rr 11
Martin-Marietta Corp. v. Bendix Corp., 690 F.2d
e I OE ET 19
Metropolitan Life Ins. Co. v. Massachusetts, 471
pe ne rene Er Cee 9, 12
Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58
17777 —•—— ———— Oe 12
Michigan Canners and Freezers Ass’n, Ine. v.
Agricultural Marketing and Bargaining Bd.,
J 20
NLRB v. Insurance Agents’ Int'l Union, 361 U.S.
i e ae aes 9
Owen v. City of Independence, 445 U.S. 622
J — RON Oe aa 10, 11
Pennhurst State School and Hosp. v. Halderman,
Ge ee ea 13, 14

H. K. Porter Co. v. NLRB, 397 U.S. 99 (1970)...... 9,17
Private Truck Council of America, Inc. v. Quinn,

Se ee 19
Rosado v. Wyman, 397 U.S. 397 Fa 14
Samuels v. District of Columbia, 770 F.2d 184

. [ 14
Smith v. Robinson, 468 US. 992 e 11

vi

TABLE OF AUTHORITIES—Continued

Page
White Mountain Apache Tribe v. Williams, 8.0
F.2d 844 (9th Cir.), cert. denied, 479 U.S. 1060
e A 19
Wisconsin Dep't of Industry v. Gould, Inc., 475
rr 12
Wright v. City of Roanoke Redev. and Housing
Auth., 479 U.S. 418 (1987 ——.,.f 14, 18

OTHER AUTHORITIES:

The Civil Rights Act of 1871, 42 U.S.C. § 1983....passim
National Labor Relations Act, Section 8(d), as

amended, 29 U.S.C. § 158(d) -...........................-...- passim
Supremacy Clause, United States Constitution,

pg fy IA eh ee EY passim
Taft-Hartley Act, 29 U.S.C. § 141 (b) (1982) 15

22 2

IN THE
Supreme Court of the United States

OCTOBER TERM, 1988

No.

GOLDEN STATE TRANSIT Cokp.,
Petitioner,

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

Petitioner Golden State Transit Corporation respect-
fully prays that a writ issue to review the judgment and
opinion of the United States Court of Appeals for the
Ninth Circuit, dated September 15, 1988.

OPINIONS BELOW

The opinion of the United States Court of Appeals for
the Ninth Circuit, dated September 15, 1988, is presently
unreported and is reprinted in the Appendix to this Pe-
tition (“Pet. App.”), at 18a. Other relevant opinions be-
low are reported, and are cited in this Court’s prior
ruling in this case, 475 U.S. 608 (1986), reprinted in
Pet. App., at la.

2
JURISDICTIONAL STATEMENT

The judgment of the Court of Appeals was entered on
September 15, 1988. The jurisdiction of this Court rests
upon 28 U.S.C. § 1254(1).

CONSTITUTIONAL AND
STATUTORY PROVISIONS INVOLVED

The constitutional and statutory provisions involved,
set forth in Pet. App., at 32a, are:

Supremacy Clause, United States Constitution, Article
VI, clause 2.

National Labor Relations Act (“NLRA”), Section
8(d), as amended, 29 U.S.C. § 158(d).

The Civil Rights Act of 1871, 42 U.S.C. § 1983.

STATEMENT OF THE CASE

This case arose because the City of Los Angeles ( the
City”) decided to condition renewal of Golden State
Transit Corp.’s (“Golden State”) franchise to operate
Yellow Cab of Los Angeles, then the City’s largest taxi-
cab company, upon immediate resolution of a peaceful
labor dispute between Golden State and the Teamsters
local representing Golden State’s drivers. The Teamsters
had struck at midnight on February 11, 1981, the day
that the City Council was to consider renewal of the
franchises of all thirteen cab companies operating in Los
Angeles. Although Golden State had been found fully
qualified for long-term renewal of its franchise by all
subordinate city agencies, at the Teamsters’ behest the

1 This case concerns the remedial aspects of the controversy con-
sidered by the Court in Golden State Transit Corp. v. City of Los
Angeles, 475 U.S. 608 (1986). The salient facts and procedural his-
tory of this case are set forth in detail in the Supreme Court’s prior
opinion, 475 U.S., at 609-13, Pet. App., at 2a-6a. The following sum-
mary highlights those issucs most relevant to the remedial question
raised in this petition, focusing on post-Supreme Court develop-
ments in this litigation.

City Council voted to withhold renewal of Golden State’s
franchise pending settlement of the labor dispute.*

Golden State immediately initiated this lawsuit against
the City, seeking declaratory and injunctive relief and
damages. On April 13, 1981, the U.S. District Court for
the Central District of California found that the City’s
conduct denied Golden State rights granted by the federal
labor laws and enjoined the City’s interference in the
labor dispute. 520 F. Supp. 191 (C.D. Cal. 1981) (see
475 U.S., at 611-12, Pet. App., at 4a-5a). This pre-
liminary injunction was overturned on appeal, 686 F. 2d
758 (9th Cir. 1982), cert. denied, 459 U.S. 1105 (1983).
The Ninth Circuit held that while the City conditioned
renewal of Golden State’s franchise upon immediate reso-
lution of the labor dispute, 686 F.2d, at 759, the use of
streets and highways was a matter of “local concern”
and therefore municipal regulation of labor disputes in-
volving streets and highways did not conflict with federal
law. Id. at 760.

The case was remanded to the district court, which
denied Golden State’s renewed request for injunctive re-
lief. The next day following that denial, still in the midst
of this litigation, the City served a cease and desist order
upon Golden State, forcing its cabs off the roads and
destroying its business.“

2 The Mayor and various members of the City Council previously
had attempted unsuccessfully to mediate the differences between
the Teamsters and Golden State. As stated in this Court’s opinion,
475 U.S., at 610-11, Pet. App., at 3a-4a, the City Council initially
voted to hold Golden State’s franchise in abeyance for approximately
one month, allowing the parties time to settle the dispute. When no
settlement was achieved, on March 23, 1981, again at the behest
of the Teamsters, the City Council denied (“den State renewal of
its franchise.

At the time of this cease and desist order, Golden State was
involved in an involuntary Chapter 11 reorganization in‘tiated by
one of its creditors. The Chapter 11 proceeding was converted to a
Chapter 7 liquidation thereafter.

4

The case returned to the Ninth Circuit after a final
ruling against Golden State in the district court. In its
second ruling, the Ninth Circuit disavowed its prior opin-
ion, holding that reliance upon the “local concern” ex-
emption had been misplaced, and that municipal regula-
tion of labor matters involving “streets and highways”
could be inconsistent with federal labor law. 754 F.2d
830, 832-33 (9th Cir. 1985). The Ninth Circuit con-
cluded, however, that “only actions seeking to directly
alter the substantive outcome of a labor dispute should
be preempted,” id., at 833, and that the City’s conduct
was permissible because it had not attempted to dictate
the terms of the parties’ collective bargaining agree-
ment. Id.

The Court’s Previous Ruling

This Court granted certiorari and reversed. The Court
found ample evidence in the record to establish that the
City in fact conditioned renewal of Golden State’s fran-
chise upon resolution of the labor dispute, 475 U.S., at
615-16, n.6, Pet. App., at 9a, n.6, and held that the City
Council’s attempt to force a settlement of the labor dis-
pute denied Golden State the right to rely upon its eco-
nomic strength in a labor dispute and to bargain free
from government coercion.

The parties’ resort to economic pressure was a le-
gitimate part of their collective-bargaining process.
Machinists (v. Wisconsin Employment Relations
Comm'n], 427 U.S. [132], at 144. But the bargain-
ing process was thwarted when the city in effect im-
posed a positive durational limit on the exercise of
economic self-help. . . .

475 U.S., at 615, Pet. App., at 8a-9a.

“*lrlesort to economic weapons should more peace-
ful measures not avail’ is the right of the employer
as well as the employee,” and “the State may not
prohibit the use of such weapons . . any more than
in the case of employees.” Machinists v. Wisconsin
Employment Relations Comm’n, 427 U.S., at 147,

quoting American Ship Building Co. v. NLRB, 380
U.S., at 317. “[F]ederal law intended to leave the
employer and the union free to use their economic
weapons against one another.” Belknap, Inc. v.
Hale, 463 U.S., at 500. We hold, therefore, that the
city was pre-empted from conditioning Golden
State’s franchise renewal on the settlement of the
labor dispute.

475 U.S., at 618, Pet. App., 12a. The Court reaffirmed
the primacy of free collective bargaining under the fed-
eral labor laws, 475 U.S., at 619, Pet. App., at 12a-13a,
and held that municipal coercion such as applied here di-
rectly conflicted with the system of private industrial dis-
pute settlement created by Congress. Justice Rehnquist
dissented, reasoning that the express language of the
NLRA did not support this application of the Court’s
labor law preemption doctrine. 475 U.S., at 623, Pet.
App., at 16a-17a.

Post-Remand Proceedings

On remand the district court granted Golden State
summary judgment on liability, finding once again that
the City had conditioned renewal of Golden State’s fran-
chise upon immediate resolution of the labor dispute.‘
During the course of argument on summary judgment,
however, the district court sua sponte ordered further
argument and briefing on the court’s power to award
compensatory damages to Golden State. Golden State
contended that compensatory damages were appropriate
both under 42 U.S.C. § 1983 and pursuant to the inherent
remedial powers of the federal courts. The City dis-
agreed, but admitted that injunctive relief against it was

appropriately entered.

* Golden State had not filed a motion for summary judgment prior
to Supreme Court review. In the summary judgment proceedings in
the district court, the City did not present any evidence, contenting
itself with arguing court that had considered this case—
including this Court—had misconstrued the record and the City’s
motives. Summary judgment was entered without written opinion.

6

The district court held that it had no power to award
damages in this case, rejecting the “nebulous notion”
that it possessed any inherent power to award damages.
The district judge further concluded that Section 1983
relief was inappropriate, both because “the NLRA does
not create rights and obligations with respect to third
parties who are not parties to a collective agreement”
and because the National Labor Relations Board’s pri-
mary jurisdiction over wrongs committed by employers
and unions precluded judicial relief, under Section 1983,
against state or local governments. The district court
concluded that injunctive relief was appropriate, how-
ever, accompanied by ancillary monetary relief limited
to the fair market value of Golden State’s tangible assets
on March 23, 1981 (the date the City Council decided
not to renew Golden State’s franchise), less any sums
received by Golden State during the ensuing bankruptcy.
The court, at the joint request of the parties, agreed to
certify for immediate appeal the issue of its power to
award compensatory damages.“

The Decision Below

The Ninth Circuit affirmed, concluding that the fed-
eral courts have no power to award damages in this case.
The panel below held that Section 1983 was limited to
cases involving a “direct violation” of a federal statute,
and that the express language of the NLRA “impose([s]
obligations on ‘an employer’ and on ‘a labor organization.’
Actions of a third-party, not employer or employee labor
organization, do not give rise” to a “direct violation” of
the NLRA. Pet. App., at 24a. Despite the clear ab-

5 By refusing to allow recovery for Golden State’s intangible
assets (goodwill and the going concern value of the largest and
oldest taxi company in Los Angeles), the proposed monetary remedy
would not be of any substantial value to Golden State. Neither
would an injunction be of value to an employer long ago forced to
liquidate its business. As the City has recognized by not opposing
certification or a stay of mandate below, the sole issue of any sub-
stance remaining in this case is Golden State’s right to compensa-

tory damages.

7

sence of any alternative federal statutory remedy against
the City, the panel further held that Congress deliber-
ately precluded judicial enforcement of Golden State‘s
rights under Section 1983 by empowering the National
Labor Relations Board (“NLRB”) to rectify unfair
labor practices committed by employers and unions. Pet.
App., at 25a. The panel found no direct or actual con-
flict between the City’s action and the NLRA because
“the NLRA does not explicitly prohibit the City from
acting in the area of labor relations,” Pet. App., at 27a,
and thus refused to hold that Section 1983 relief was ap-
propriate under the Supremacy Clause. Finally, the
panel held that in this case no “inherent authority exists
in the federal courts to award compensatory damages
where section 1983 damages are unavailable,” Pet. App.,
at 28a, reasoning that any such inherent authority was
limited to cases involving “individual constitutional
right[s].” Id.

Judge Alarcon, expressing serious reservations, con-
curred in the judgment “under compulsion of our deci-
sion in White Mountain Apache Tribe v. Williams
(White Mountain), 810 F.2d 844 (9th Cir.), cert. de-
nied, [479 U.S. 1060] 107 S. Ct. 940 (1987).” Pet. App.,
at 29a. Admitting that “the law of the circuit compels
us to hold that section 1983 damages are not available
because the City of Los Angeles did not directly violate
the National Labor Relations Act,” Judge Alarcon con-
cluded that “I believe that White Mountain is inconsis-
tent with the reasoning of the Supreme Court in Wright
v. Roanoke Redev. and Housing 479 U.S. 418] 107 8.
Ct. 766 (1987),” Pet. App., at 29a:

The Court in Wright did not hold that a state
actor would be liable only if a federal statute ex-
pressly forbids the state actor from such interfer-
ence. Instead, the Court focused on protecting the
right secured by federal law, and not on whether all
persons who might deprive another of the benefits
of such a statute are identified by Congress. The
language used by the Court in Wright carries out

8

the plain meaning of the language of section 1983.
Our opinion in White Mountain frustrates congres-
sional intent.

In the case sub judice, the City of Los Angeles de-
prived Golden State of the statutory right to engage
in the collective ba process free from third-
party interference. 29 U.S.C. 5 158 (d); Golden
State, 475 U.S. at 618. Thus, under Wright, Golden
State would appear to have cause of action for dam-
ages under section 1983.

Pet. App., at 30a.

REASONS FOR GRANTING THE WRIT

I. REFUSAL TO GRANT A DAMAGE REMEDY EF-
FECTIVELY NEGATES THIS COURT’S DECISION
IN GOLDEN STATE TRANSIT CORP. v. CITY OF
LOS ANGELES.

In Golden State, this Court held “that the City was
pre-empted from conditioning Golden State’s franchise
renewal upon settlement of the labor dispute,” 475 U.S.,
at 618, Pet. App., at 12a, because Congress deliberately
intended to protect management and labor from govern-
mental interference in the collective bargaining process.“

* This Court stated :

There is no question that the Teamsters and Golden State
employed permissible economic tactics... .

The parties’ resort to economic pressure was a legitimate
part of their collective-bargaining process. [Citation omitted.
But the bargaining process was thwarted when the city in
effect imposed a positive durational limit on the exercise of
self-help. . . .

That such a condition—by a city or by the National Labor
Relations Board—contravenes congressional intent is demon-
strated by the language of the NLRA and its legislative
history
„resort to economic weapons should more peaceful measures
not avail’ is the right of the employer as well as the employee,”
and “the State may not prohibit the use of such weapons

9
This Court reiterated that [f] ree collective bargaining
of

now-defunct “winner

We submit that this Court, by specificaiiy holding that
Congress forbade this very municipal interference with
lective bargaining, necessarily intended that the lower
courts would use normally available emedies to grant
Golden State meaningful relief.* It simply is illogical to

any more than in the case of employees.” Machinists v. Wis-
consin Employment Relations Comm'n, 427 U.S., at 147, quoting
American Ship Building Co. v. NLRB, 380 U.S., at 317. “[F Jed-
eral law intended to leave the employer and the union free to
use their economic weapons against one another.” Belknap, Inc.
v. Hale, 463 U.S. at 500.

475 U.S., at 615, 616, 618, Pot. App., at 8a, 9a, 12a (emphasis added).

7475 U.S., at 619, Pet. App., at 12a (quoting New York Tel. Co.
v. New York Labor Dep't, 440 U.S. 519, 551 (1979) (Powell, J.,
dissenting) ). See also Metropolitan Life Ins. Co. v. Massachusetts,
471 U.S. 724, 753-55 (1985); Belknap, Inc. v. Hale, 463 U.S. 491,
524 (1883) „Frennan, J., dissenting); H. RK. Porter Co. v. NLRB,
397 U.S. 99, 102-04 (1970); Local 174, Int'l Bhd. of Teamsters v.
Lucas Flour Co., 369 U.S. 95, 104 (1962); NLRB ». Insurance
Agents’ Int'l Union, 361 U.S. 477, 484-86 (1960).

* Compensatory damages, of course, are a “remedial mechanism
normally available in the federal courts.” Bivens v. Siz Unknown
Named Agents of the Fed. Bureau of Narcotics, 403 U.S. 388,
397 (1971). “[W)here federally protected rights have been invaded,
it has been the rule from the beginning that courts will be alert

3

10

conclude, consistent with this Court’s decision, that the
federal courts may not award a traditional damage rem-
-edy to an employer whose business was singled out and
destroyed solely because its owners bargained in pre-
cisely the fashion envisioned by Congress. This Court
concluded that by conditioning franchise renewal upon
resolution of the labor dispute, the City unlawfully de-
stroyed Golden State’s business; according to ihe Ninth
Circuit, Golden State, and not the City, must bear the
loss occasioned by the municipal conduct already con-
demned by this Court.

Compensatory damages are a necessary and appro-
priate remedy for Golden State’s injuries. Granting an
injunction—even accompanied by the illusory ancillary
relief envisioned by the district court—to a business un-
lawfully destroyed years ago does not even begin to re-
store the status quo, and ignores the years of lost profits
and competitive harm occasioned by the City’s illegal
conduct.“ This case does not fall within the limited class
of cases in which damages might be considered inappro-
priate. The City has no claim to eleventh amendment
immunity, Owen v. City of Independence, 445 U.S.
622, 639 (1980), and all of the difficult issues in this
case—including whether a remediable wrong has been
committed—have been resolved by this Court’s opin-
ion and the City’s admission that injunctive relief is ap-

to adjust their remedies so as to grant the necessary relief. And it
is also well settled that where legal rights have been invaded, and a
federal statute provides for a general right to sue for such invasion,
federal courts may use any available remedy to make good the
wrong done.” Bell v. Hood, 327 U.S. 678, 684 (1946) (footnotes
omitted)

* As stated above, it was the City’s own conduct that created the
need for a damage remedy. In 1983, once the preliminary injunction
was overturned on appeal and the district court refused to renew
the prohibition, the City immediately issued a cease and desist order
to Golden State, forcing its cabs off the street and the company into
liquidation. The City had no pressing reason for this conduct; there
is not even a hint that the City’s action served any legitimate public
interest.

11

propriate. We do not seek damages on be lalf of an ill-
defined or unwieldy class, nor do we ask the courts to
establish a value for inchoate constitutional rights. The
business issues involved in calculating Golden State’s
damages—assigning a value to the business, and esti-
mating lost profits during the years that Golden State
improperly was prevented from operating—are addressed
by the federal courts on a daily basis, in cases rang-
ing from antitrust to takings. Thus, the basic principle,
tracing back to Marbury v. Madison, 5 U.S. (1 Cranch)
137, 163 (1803), “that every right, when withheld, must
have a remedy and every injury its proper redress,” is
fully applicable here.“

The decision below not only denies Golden State its
due, but poses a substantial and direct threat to the
bargaining process. Confiding exclusive protection of the
collective bargaining process, the key concern of the
NLRA, to the equitable discretion of the lower courts
would be a serious error. The lower federal courts re-
peatedly have shown a less than complete understanding
of this difficult area; in this very case, where the munici-
pal interference with bargaining was of the crudest

10 The Ninth Circuit’s conclusion that the federal courts somehow
have been deprived of their traditional power to award damages in
this case has absolutely no historical or logical basis. Damage reme-
dies cannot be limited to the scope of Section 1983, as intimated by
the court below. Long prior to the passage of Section 1983, a
supplementary remedy designed to implement the provisions of the
fourteenth amendment, “[l]ocal governmental units were regu-
larly held to answer in damages for a wide range of statutory and
constitutional violations . .. Damage actions against municipalities
for federal statutory violations were also entertained.” Owen v.
City of Independence, 445 U.S. 622, 639 and n.19 (1980). See also
Smith v. Robinson, 463 U.S. 992, 1012 n.15 (1984). Congress in no
way limited this admitted authority by passing a new law—Section
1983—extending federal court jurisdiction to additional wrongs.
Moreover, this Court has held definitively that federal remedial
power is not limited to cases involving “personal” or individual“
rights. See, e.g., Lynch v. Household Finance Corp., 405 U.S. 538,
552 (1972) ([The dichotomy between personal liberties and prop-
erty rights is a false one.“)

12

kind, the Ninth Circuit twice mistakenly held (using
completely different rationales) that the City’s conduct
was not in conflict with federal labor law.! Labor pre-
emption law is an area of substantial complexity, in
which doctrinal developments almost guarantee that the
lower courts will not be able to protect key federal rights
through injunctive relief alone. Since 1983, this Court
has issued ten labor preemption decisions, and these
decisions have yet to be assimilated into a coherent body
of law by the lower courts. Losses resulting from these
doctrinal developments, and lower court misunderstand-
ing of this complex area of the law, cannot be allowed to
fall upon innocent parties like Golden State rather than
upon those who have violated federal law.“

If the decision below is allowed to stand, however,
neither management nor labor will be able to combat im-
proper municipal pressures. In the future, if injunctive

11 See supra, at 3-4.

12 In addition to Golden State, first (Garmon) and second (Ma-
chinists) branch preemption cases have included (in chronological
order) Belknap, Inc. v. Hale, 463 U.S. 491 (1983); Metropclitan
Life Ins. Co. v. Massachusetts, 471 U.S. 724 (1985); Wisconsin
Dep't of Industry v. Gould, Inc., 475 U.S. 282 (1986); Int'l Long-
shoremen’s Ass'n v. Davis, 476 U.S. 380 (1986); Baker v. General
Motors Corp., 478 U.S. 621 (1986); and Fort Halifax Packing Co.
v. Coyne, —— U.S. ——, 107 S. Ct. 2211 (1987). Section 301
preemption cases have included Allis-Chalmers Corp. v. Lueck, 471
U.S. 202 (1985); Caterpillar Inc. v. Williams, —— U.S. ——, 107
S. Ct. 2425 (1987); and Lingle v. Norge Div. of Magic Chef, Inc.,
—— U.S. ——, 108 S. Ct. 1877 (1988).

13 This is an even more pressing concern because labor preemp-
tion issues are likely to arise in state courts, which have even less
familiarity with federal labor laws, and the policies underlying
them, than their federal counterparts. Metropolitan Life Ins.
Co. v. Taylor, 481 U.S. 58 (1987) (properly pleaded state claim not
removable to federal court on basis of federal preemption defense) ;
Charles Dowd Box Co. v. Courtney, 368 U.S. 502 (1962) (state and
federal courts have concurrent jurisdiction over Section 301 claims).

13

relief is improperly denied, or if appropriate relief is
granted and then overturned (as occurred here), man-
agement or labor will have to yield because damages
arising during the pendency of an appeal will not be re-
coverable. Golden State refused to accede to the City’s
unlawful edict, believing that the rights granted by Con-
gress would be vindicated fully by the federal courts.
Unless the decision below is reversed, no employer or
labor union will make that assumption again, and no
further appeals will be taken. The result will be not a
dilution, but a negation, of the congressional regime of
free collective bargaining.

II. THE RULING BELOW IS IN DIRECT CONFLICT
WITH THIS COURT’S INTERPRETATION OF 42
US.C. 8 1983 AND TACITLY REVERSES THIS
COURT'S PRIOR DECISION.

Judge Alarcon’s concurrence, quoted at greater length
above, is absolutely correct in concluding that the deci-
sion below “is inconsistent with the reasoning of the
Supreme Court in Wright v. Roanoke Redev. and Hous-
ing, [479 U.S. 418] 107 S. Ct. 766 (1987)” and that
“under Wright, Golden State would appear to have a
cause of action for damages under section 1983.” Pet.
App., at 29a, 30a. The Ninth Circuit holding that Sec-
tion 1983 relief is unavailable here is based upon two
interrelated and equally incorrect propositions: first,
that the NLRA grants Golden State no enforceable rights
against the City, and second, that Section 1983 is ap-
plicable only where a “direct violation” of a federal
statute occurs. Neither proposition has any foundation
in this Court’s jurisprudence; together, they have been
used by the court below to reverse tacitly this Court’s
holding in Golden State.

In concluding that the National Labor Relations Act
does not grant Golden State enforceable rights against
the City, the Ninth Circuit attempted to fit this case into
the exception from Section 1983 relief created in Penn-
hurst State School and Hosp. v. Halderman, 451 U.S.

14

1 (1981). The Pennhurst exception, however, is appro-
priate only where Congress merely has encouraged rather
than mandated a result:

In Pennhurst, a § 1983 action did not lie because the
statutory provisions were thought to be only state-
ments of “findings” indicating no more than a con-
gressional preference—at most a “nudge in the pre-
ferred direction In], 451 U.S., at 19, and not in-
tended to rise to the level of an enforceable right.

Wright v. City of Roanoke Redev. and Housing Auth.,
479 U.S., at 423; see also id., at 433 (O'Connor, J., dis-
senting).“

This Court's previous ruling in Golden State estab-
lishes that the Pennhurst exception does not apply here.
Unlike Pennhurst cases, see supra note 14, this case does
not involve a cooperative federalism or grant scheme in
which federal monies are tied to a desirable but not
mandatory norm. This Court’s ruling in Golden State
establishes that in passing and amending the National
Labor Relations Act, Congress deliberately intended to
prohibit municipal interference in the bargaining proc-
ess. There can be no question that this absolute prohibi-
tion is statutory in origin:

That such a condition—by a city or by the Na-
tional Labor Relations Board—contravenes congres-

14 See also Pennhurst State School and Hosp. v. Halderman,
451 U.S. 1, 20 (1981) (legislative history of act in question led to
conclusion “that Congress intended to encourage, rather than man-
date, the provision of better services to the developmentally dis-
abled.”) ; Rosado v. Wyman, 397 U.S. 397, 413 (1970) (“Congress
sometimes legislates by innuendo, making declarations of policy and
indicating a preference while requiring measures that though fall-
ing short of legislating its goals, serve as a nudge in the preferred
directions.”); Samuels v. District of Columbia, 770 F.2d 184,
195 (D.C. Cir. 1985) (“section 1983 will not lie to enforce vague
policy sections of federal statutes intended only to advise, rather
than to mandate“); see also id., at 197, and cases cited therein.

15

sional intent is demonstrated by the language of the
NLRA and its legislative history. The NLRA re-
quires an employer and a union to bargain in good
faith, but it does not require them to reach agree-
ment. § 8(d), as amended, 29 U.S.C. § 158(d) (duty
to bargain in good faith “does not compel either
party to agree to a proposal or require the making
of a concession” )

A local government as well as the National La-
bor Relations Board, lacks the authority to “ ‘intro-
duce some standard of properly “balanced” bargain-
ing power’ . . . or to define ‘what economic sanctions
might be permitted negotiating parties in an “ideal”
or “balanced” state of collective bargaining.’ ”
475 U.S., at 616, 619, Pet. App., at 9a, 12a-13a, (em-
phasis added; citations omitted). Neither can there be
any doubt that Golden State, as an employer, was one of
the parties for whose protection this preclusion was
enacted; Golden State certainly does not appear here
as a member of the general public, incidentally benefited
by a statute designed to enhance the public weal.

in contrast to this principled Pennhurst inquiry, which
reveals that Golden State has a cause of action under
Section 1983, the Ninth Circuit created an entirely new
limitation upon Section 1983 by holding that such relief
is unavailable unless state or local conduct “directly vio-
lates” a federal statute. This Court never has recognized
any such limitation; neither has any other circuit court.
As stated by Judge Alarcon, this new exception is in
direct conflict with this Court’s Section 1983 rulings, as
exemplified by Wright, supra, which properly concentrate
on “protecting the right secured by federal law, and not
on whether all persons who might deprive another of the

15 Section 1(b) of the Taft-Hartley Act, 29 U.S.C. § 141(b) (1982)
states (in pertinent part) :
It is the purpose and policy of this chapter . . to prescribe the
legitimate rights of both employees and employers.

16

benefits of such statute are identified by Congress.”
Pet. App., at 30a.

The dangers of such a test are amply revealed in the
decision below. The Ninth Circuit used its unprecedented
“direct violation” test to set aside this Court’s prior rul-
ing by holding that the literal language of the NLRA,
read in isolation, was not “directly violated” in this case.

[T)his statute imposes mutual obligation[s]” upon
“the employer and the representative of its employ-
ees” to “bargain collectively” and “in good faith.”

Actions of a third-party, not employer or employee
labor organization, do not give rise to a claim for
damages against the third-party under these pro-
visions.
Pet. App., at 24a.“ And subsequently, the Ninth Circuit
stated “we cannot say that the City’s actions directly
conflict with an ‘explicit provision’ of the NLRA—the
NLRA does not explicitly prohibit the City from acting
in the area of labor relations. Pet. App., at 27a
(emphasis added).

16 The Ninth Circuit’s conclusion here is disingenuous. The quote
above discusses only the unfair labor practice proscriptions of the
NLRA, Sections 8(a) and 8(b) of the statute. Yet in the immedi-
ately preceding paragraph, the Ninth Circuit states:

Here, the federal statute in question is the NLRA. The provi-
sion at issue is section 8(d), as amended, 29 U.S.C. § 158(d).

Pet. App., at 24a (emphasis added). The court below apparently
shifted emphasis away from section 8(d) because this provision
was the basis for this Court’s ruling, as acknowledged by the Ninth
Circuit:

The Court concluded that Congress had preempted intrusion
by “a Iccal government” into the collective bargaining process by
enacting the NLRA, section 8(d), as amended, 29 U.S.C.
§ 158(d).

Pet. App., at 19a (emphasis added).

17 The Ninth Circuit’s emphasis on the express language of the
statute is markedly similar to Justice Rehnquist’s dissent in this
case, which also argued that the statute's literal language did not

17

The Ninth Circuit’s fixation upon the express language
of the statute trivializes the power of the federal courts
tes,

federal rights are fully remediable, under Section 1983 or otherwise,
absent a clear congressional indication to the contrary.

1 See, e.g., H. XK. Porter Co. v. NLRB, 397 U.S. 99, 103-06 (1970)
(reviewing legislative history of Labor Management Relations Act
and concluding that Section 8(d) was intended to preclude the
NLRB from compelling concessions in bargaining) Lodge 76, Int'l
Ass'n of Machinists and Aerospace Workers v. Wisconsin Employ-
ment Relations Comm'n, 427 U.S. 132, 149, 153 (1976) (“Our deci-
sions hold that Congress meant that these activities, whether of
employer or employees, were not to be regulable by States any more
than by the NLRB... . [S)tate attempts to influence the substantive
terms of collective-bargaining agreements are as inconsistent with
the federal regulatory scheme as are such attempts by the NLRB.”).

18

Congress’ decision to leave open the use of economic
weapons.“

The Ninth Circuit was not free, in light of this Court’s
ruling, to interpret Section 80d) as a narrow definition
of the parties’ rights inter se. This Court has established
that the statute in general, and Section 8(d) in partic-
ular, prohibits federal, state and local government inter-
ference in the bargaining process, and thus grants man-
agement and labor enforceable rights against govern-
ments. Injuries caused by breach of this statutory man-
date must be remediable in damages.

III. THE WRIT SHOULD ISSUE TO RESOLVE
WHETHER SECTION 1983 RELIEF IS APPRO-
PRIATE IN PREEMPTION CASES.

We believe that this petition should be granted, for
the reasons stated above, to preserve Golden State’s stat-
utory rights, to reaffirm this Court’s ruling and to pre-
vent creation of a new and unauthorized exception to

% Section 1983 relief is not precluded here, because no “express
provision or other specific evidence from the statute itself” demon-
strates that Congress intended to foreclose Section 1983 relief.
Wright, supra, 479 U.S., at 423-24; and see id. (“ ‘We do not lightly
conclude that Congress intended to preclude reliance on § 1983 as a
remedy’ for the deprivation of a federally secured right.”) (quoting
Smith v. Robinson, 468 U.S. 992, 1012 (1984)). Congress has
empowered the National Labor Relations Board to police the con-
duct of employers and unions; there is no statutory remedy avail-
able against municipalities. In the absence of some alternative
private remedy or preclusive statutory language, it is impossible
to conclude that Congress ‘deliberately intended to foreclose judicial
relief under Section 1983. See Wright, supra, 479 U.S., at 424-28
(preclusion appropriate only where Congress creates alternatives pri-
vate remedy). It would be ironic indeed if the NLRB’s jurisdiction,
created to encourage “the practice and procedure of collective bar-
gaining,” were allowed to prevent effective protection of the collec-
tive bargaining process that forms “the cornerstone of the struc-
ture of labor-management relations carefully designed by Congress
when it enacted the NLRA.” Golden State, 475 U.S., at 619, Pet.
App. at 12a (quoting New York State Tel. Co. v. New York Labor
Dep't, 440 U.S. 519, 551 (1979) (Powell, J., dissenting) ).

— —

—

The Ninth Cireuit tacitly admitted that Section 1983
relief was available in a preemption case if the local gov-
ernment conduct was in direct and actual conflict with

Supremacy Clause, every Section 1983 case involving a
federal statutory claim necessarily involves some form
of preemption under the Supermacy Clause. The prop-

Compare Martin-Marietta Corp. v. Bendix Corp., 690 F.2d 558
(6th Cir. 1982); Kennecott Corp. v. Smith, 637 F.2d 181 (3rd Cir
1980) (Supremacy Clause and Commerce Clause claims arise under
Section 1983) with White Mountain Apache Tribe v. Williams, 810
F.2d 844 (9th Cir.), cert. denied, 479 U.S. 1060 (1987); Gould, Ince
v. Wisconsin Dep't of Industry, 750 F.2d 608 (7th Cir. 1984), aff'd

20

osition that Section 1983 relief is never available in pre-
emption cases thus cannot stand.“

Where the court below erred was not in its general
analysis, but in its conclusion that this case did not in-
volve an actual conflict between federal law and local
action. In so ruling, the Ninth Circuit repeated the crit-
ical mistake noted above; it relied upon the literal words
of the National Labor Relations Act, rather than this
Court’s binding interpretation of federal law.

[Wie cannot say that the City’s actions directly con-
flict with an “explicit provision” of the NLRA—the
NLRA does not explicitly prohibit the City from act-
ing in the area of labor relations

Pet. App., at 27a (emphasis added). Once again, how-
ever, the express language of the statute cannot deter-
mine whether a federal-state conflict exists, because the
federal courts—and especially this Court—have the power
and the duty to interpret the language used by on-
gress, in light of legislative history, to serve the legisla-

21 This Court has delineated with great care the different types
of preemption, see Michigan Canners and Freezers Ass'n v. Agri-
cultural Marketing and Bargaining Bd., 467 U.S. 461, 469 (1984) ;
Brown v. Hotel and Restaurant Employees and Bartenders Int'l
Union Local 54, 468 U.S. 491 (1984), and has held that in cases
involving actual conflict between federal law and state or local
action, preemption follows “as a matter of substantive right.”
Brown, supra, 468 U.S., at 503.

We do not contend that Section 1983 relief is available in every
preemption case; there are many preemption cases in which a state
or local government acts in an area of pervasive federal regulation
or interest, but does not contravene any specific federal statutory
the federal government has not decreed how particu-
to be treated (in contrast to the situation here,
laws specify that employer and union bargaining

be free from all government sanction), we do not
propose that this Court recognize a generalized “right to be free
from excessive state or local regulation in an area of federal inter-
est,” remediable under Section 1983. Cf. Chapman v. Houston
Welfare Rights Org., 441 U.S. 600 (1979).

gg ii — i kD •-w Äůͥm g i ee el eee ' rw — — — —

created a regime of private industrial dispute settlement,
in which management and labor have the right to bar-
gain free from government sanction.

54, 468 U.S. 491 (1984), this Court explicitly held that
“field preemption” was not involved in labor cases, 468
U.S., at 501, and stated:

The Court has, however, tradi-
Nee
on the basis of an actual conflict with §7. If em-

ployee conduct is protected under § 7, then state law

right granted it it by Congress (“‘[rjesort to economic
weapons should more peaceful measures not avail’ is
the right of the employer as well as the employee, and
‘the State may not prohibit the use of such weapons
any more than in the case of employees,. 475 U.S., at

618, Pet. App., at 12a (emphasis added)). Indeed, the
entire thrust of the Machinists preemption doctrine is to

ly i

: 2
10
1115 111

la

APPENDIX
SU IN THE
seer yx , .

No. 84-1644
3 ; N

. i
ö N .
1 :
1
1 4
b ¢
** a an 92
whe FA
“is ‘ths “ie 1
8 , La *
5
* 2 * „
"yA * * =
Per 2
8 5 — tex
by bat g iy Ny
225
ae to
23 1 ;
7
** f i,

Certiorari to the United States Court of Appeals
for the Ninth Circuit

| 4, 1985—Decided April 1, 1986

*
*
*
—
U
* —
*
* =~
x

2a

John F. Haggerty argued the cause and filed a brief
for respondent. *

JUSTICE BLACKMUN delivered the opinion of the Court.

The city of Los Angeles, Cal., refused to renew Golden
State Transit Corporation’s taxicab franchise after the
company’s drivers went on strike. We are asked to de-
cide whether, under Machinists v. Wisconsin Employment
Relations Comm’n, 427 U.S. 132 (1976), the city’s action
is preempted by the National Labor Relations Act
(NLRA), 29 U. S. C. § 151 et seq.

I

In 1980, Golden State, which operated taxicabs under
the Yellow Cab name, applied to the city for a renewal
of its operating franchise eventually scheduled to lapse
on March 31, 1981. That franchise had first been ac-
quired in 1977. On September 4, 1980, the city’s Board
of Transportation Commissioners recommended the re-
newal of Golden State’s franchise—the largest, with ap-
proximately 400 cabs, of companies operating in Los
Angeles—along with the franchises of 12 other taxi
companies.

Peter G. Nash, Dirie L. Atwater, and Stephen A. Bokat filed a
brief for the Chamber of Commerce of the United States as amicus
curiae urging reversal.

Briefs of amici curiae urging affirmance were filed for the Na-
tional League of Cities et al. by Rex F. Lee, Benjamin . Heineman,
Jr., Carter G. Phillips, Benna Ruth Solomon, and Joyce Holmes
Benjamin; and for the National Institute of Municipal Law Officers
by George Agnost, Roy D. Bates, Benjamin L. Brown, J. Lamar
Shelley, John W. Witt, and Roger F. Cutler.

Briefs of amici curiae were filed for the National Labor Relations
Board by Acting Solicitor General Fried, Deputy Solicitor General
Wallace, Bruce N. Kuhlik, Norton J. Come, Linda Sher, and Robert
C. Bell, Jr.; and for the American Federation of Labor and Con-
gress of Industrial Organizations by David Silberman and Laurence
Gold.

3a

In October, while the franchise renewal application
was pending, Golden State’s labor contract with its driv-
ers expired. The company and the drivers, represented
by Local 572 of the International Brotherhood of Team-
sters, signed a short-term contract in order that opera-
tions would continue while negotiation and mediation
proceeded. This interim contract was to expire at mid-
night February 10, 1981, the day before the City Council
was scheduled to consider action on the franchise re-
newals.

On February 2, the Council’s Transportation and
Traffic Committee endorsed franchise renewals recom-
mended by the Board of Transportation Commissioners.
The Committee’s report stated that Golden State and
other companies were “in compliance with all terms and
conditions of their franchise[s].” App. 39.

On February 11, the drivers struck Golden State, halt-
ing its operations. At the Council: meeting that day,
Teamster representatives argued against renewal of
Golden State’s franchise because of the pendency of the
labor dispute. The Council postponed decision on Golden
State’s application until February 17, but, with possibly
one exception, approved all other franchise renewal ap-
plications. At the February 17 meeting, when the union
again opposed the renewal, the Council voted to extend
Golden State’s franchise from March 31 to April 30, but
only if the Council expressly found, on or before March
27, that the extension was in the best interests of the

city.

At its March 23 meeting, the Council held a short
public hearing on whether it should grant the limited ex-
tension. By this time, the labor dispute and the franchise
renewal issue had become clearly intertwined. The
Teamsters opposed any extension of the Yellow Cab
franchise, stating that such action would simply lengthen
the strike and keep the drivers out of work. It pre

4a

ferred to see the franchise terminated, and to have the
drivers seek jobs from Golden State’s successor or from
other franchise holders. As others spoke, the discussion
turned to whether there was even a need for Yellow
Cab, in light of the services performed by the other 12
franchised taxi companies. There were comments re-
garding an excess of cabs; the city’s policy at the time,
however, was not to limit the number of taxi companies
or the number of taxis in each fleet. Id., at 81-82.

The strike was central to the discussion. One Council
member charged Golden State with negotiating unrea-
sonably, id., at 71, while another accused the company
of trying to “brea[k] the back of the union.” Id., at 66.
The sympathies of the Council members who spoke lay
with the union. But rather than defeat the renewal out-
right, the council reached a consensus for rejection of the
extension with a possibility for reopening the issue if
the parties settled their labor dispute before the fran-
chise expired the following week. Four Council members
endorsed this approach, and the Assistant City Attorney
said that he clearly had informed the parties that this
was the city’s position. Id., at 68. The Council President
said: “I find that it will be very difficult to get this ordi-
nance past (sic) to extend this franchise if the labor
dispute is not settled by the end of this week.” Id., at 75.
He added: “I just think that this kind of information
should be put out in the open, so everybody understands
it.” Ibid. The Council, by a vote of 11 to 1, defeated the
motion to extend the franchise and it expired by its
terms on March 31.

II

Golden State filed this action in the United States
Distriet Court for the Central Distriet of California, al-
leging that the city’s action was pre-empted by the
NLRA and violated the company’s rights to due process
and equal protection. It sought declaratory and injunc-
tive relief and damages. The District Court found that

5a

it was “undisputed that the sole basis for refusing to
extend [Golden State’s} franchise was its labor dispute

with its Teamster drivers,” 520 F. Supp. 191, 193
(1981); that the Council had threaten fed] to allow
Yellow Cab’s franchise to terminate unless it entered into
a collective bargaining agreement with the Teamsters,”
id., at 194; and that the Council had denied the company
an essential weapon of economic strength—the ability to
wait out a strike. On the basis of the pre-emption claim,
the District Court granted Golden State’s motion for a
preliminary injunction to preserve the franchise. /bid.
The Court of Appeals for the Ninth Circuit found “am-
ple evidence” in the record to support the District Court’s
finding, but nevertheless vacated the injunction. 686 F.2d
758, 759, 762 (1982). The court reasoned that Golden
State had little chance of prevailing on its pre-emption
claim or on the other grounds it asserted. This Court
denied Golden State’s petition for certiorari. 459 U. S.
1105 (1983).

Following litigation on unrelated issues, and with the
company having abandoned its equal protection claim, the
District Court granted summary judgment for the city.
App. to Pet. for Cert. 11a. Golden State had not moved
for summary judgment in its favor. The Court of Ap-
peals affirmed, holding that the city’s action was not pre-
empted. 754 F.2d 830 (1985). The court felt that, when
the activity regulated is only a peripheral or incidental
concern of labor policy, traditional municipal regulation
is not pre-empted. The court found nothing in the record
to suggest that the city’s nonrenewal decision “was not
concerned with transportation.” Id., at 833. Moreover,
to avoid undue restriction of local regulation, “only ac-

Antitrust claims were asserted in a second amended complaint
filed by Golden State. The District Court granted the city partial
summary judgment as to these claims, 563 F. Supp. 169 (CD Cal.
1983), and the Court of Appeals affirmed. 726 F.2d 1430 (CA9
1984). We again denied certiorari. 471 U.S. 1008 (1985).

Last Term, in Metropolitan Life Ins. Co. v. Massachu-
setts, 471 U. S. 724 (1985), we again noted: “The Court
has articulated two distinct NLRA pre-emption princi-
ples.” Id., at 748. See also Belknap, Inc. v. Hale, 463
U. S. 491, 498-499 (1983). The first, the so-called Gar-
mon pre-emption, see San Diego Building Trades Coun-
cil v. Garmon, 359 U.S. 236 (1959), prohibits States

ing events have . . . ‘irrevocably eradicated the effects of the alleged
violation. Los Angeles v. Lyons, 461 U.S. 95, 101 (1983), quoting
County of Los Angeles v. Davis, 440 U.S. 625, 631 (1979). We con-
clude, therefore, that the case is not moot.

This case, however, concerns the second pre-emption
principle, the so-called Machinists pre-emption. See Ma-
chinists v. Wisconsin Employment Relations Comm'n,
427 U. S. 132 (1976). This precludes state and municipal
regulation “concerning conduct that Congress intended
to be unregulated.” Metropolitan Life Ins. Co. v. Massa-

chusetts, 471 U.S., at 749.“ Although the labor-manage-
ment relationship is structured by the

F

i!
1

8
2 8
i
¥
Ef
*3
af
g
a F

U.

z
z
8
:
3
8
;
CG
Be

144 (1971). The Court recognized in Machinists

1
21
Lf
ih
SF
“EE
arte

II
Fk

5 Our pre-emption analysis is not affected by the fact that we are
v. Berkeley, ante, at 265. And the fact that the city acted through

sarily focused on the nature of the activities which the States have
of -

8a

(1960), and that Congress’ decision to prohibit certain
forms of economic pressure while leaving others unreg-
ulated represents an intentional balance between the
uncontrolled power of management and labor to further
their respective interests. Machinists, 427 U. S., at
146, quoting Teamsters v. Morton, 377 U. S. 252, 258
259 (1964). States are therefore prohibited from impos-
ing additional restrictions on economic weapons of self-
help, such as strikes or lockouts, see 427 U. S., at 147,
unless such restrictions presumably were contemplated by
Congress. “Whether self-help economic activities are em-
ployed by employer or union, the crucial inquiry regard-
ing pre-emption is the same: whether ‘the exercise of
plenary state authority to curtail or entirely prohibit
self-help would frustrate effective implementation of the
Act’s processes. Id., at 147-148, quoting Railroad
Trainmen v. Jacksonville Terminal Co., 394 U. S. 369,
380 (1969).

There is no question that the Teamsters and Golden
State employed permissible economic tactics. The drivers
were entitled to strike—and to time the strike to coincide
with the Council’s decision—in an attempt to apply pres-
sure on Golden State. See NLRB v. Insurance Agents,
361 U. S., at 491, 496. And Golden State was entirely
justified in using its economic power to withs ind the
strike in an attempt to obtain bargaining concessions
from the union. See Belknap, Inc. v. Hale, 463 U. S., at
493, 500 (employer has power to hire replacements dur-
ing an economic strike); American Ship Building Co. v.
NLRB, 380 U. S. 300, 318 (1965) (at bargaining im-
passe employer may use lockout solely to bring economic
press ue on union).

The parties’ resort to economic pressure was a legiti-
mate part of their collective-bargaining process. Machin-
ists, 427 U. S., at 144. But the bargaining process was
thwarted when the city in effect imposed a positive dura-

Ss Se
ob,

5
|
|
|
.

Tap
ai
J
f

i
8
J
f

i

i
it

|

|
if
|
|

10a

about the adjustments and agreements which the Act in
itself does not attempt to compel”) .

The Act leaves the bargaining process largely to the
parties. See H. K. Porter Co. v. NLRB, 397 U.S. 99, 103
(1970). It does not purport to set any time limits on
negotiations or economic struggle. Instead, the Act pro-
vides a framework for the negotiations; it “is concerned
primarily with establishing an equitable process for de-
termining terms and conditions of employment.” Metro-
politan Life Ins. Co. v. Massachusetts, 471 U.S., at 753.
See also § 1, as amended, of the NLRA, 29 U.S.C. § 151
(Act achieves national policy “by encouraging the prac-
tice and procedure of collective bargaining”) .

The legislative history, too, makes clear that the Act
and the National Labor Relations Board were intended to
facilitate bargaining between the parties. The Senate
Report states: “Disputes about wages, hours of work,
and other working conditions should continue to be re-
solved by the play of competitive forces This bill

compulsory arbitration.” S. Rep. No. 573, 74th Cong.,
Ist Sess., 2 (1935). Senator Wagner, sponsor of the
NLRA, said that the Board would not usurp the role of
free collective action. See 79 Cong. Rec. 6184 (1935).
See also id., at 7574 (Sen. Wagner affirming that the
Act encourages “voluntary settlement of industrial dis
putes”).

findings of pre-emption in Machinists and in its prede
cessor, Teamsters v. Morton, 377 U.S. 252 (1964). In
some areas of labor relations that the NLRA left un-
regulated, we have concluded that Congress contemplated
state regulation. See Metropolitan Life Ins. Co. v. Massa-
chusetts, 471 U.S., at 754-758; New York Tel. Co. v.
New York Labor Dept., 440 U.S. 519, 540-544 (1979)

6

=}

vately local transit company.

v. Missouri, 374 U.S. 74 (1963); ef. Bus Employees v.
Wisconsin
391-392 (1951). Nor in this case

td i 2174715 115 i 131165 ak
TH 115 oP fl : Hilt
HT .

He
1 % le 40

“ideal” .

13a
sanctions might be permitted negotiating parties in an

i
11155 H. 1 8 1114735
Hel HE ltl 127517 ; 2151

1117 83155 1 Decl
5

1 “Hs!
aa ie

1
f

b 1
BENET f e a
Kinn H Hilter telle

l4a

Court’s holding is best illustrated by comparing it to this
Court’s initial cases involving federal labor pre-emption.

i
|
i

Tu
‘i
At
it
Hit
l
itil

15a

vided by a court rather than a state labor agency. See

id., at 487, 499-501.

The opinions in both Bethlehem Steel and Garner ob-
served that Congress had furnished no guidance to the
Court as to whether or not state regulation should be

pre-empted:
essen
general of guides to construction of the Act, as it
sometimes does, by saying that its regulation either
shall or shall not exclude state action.” Bethlehem
Steel, supra, at 771

“The national Labor Management Relations Act,

as we have before pointed out, leaves much to the
states, though Congress has refrained from telling
us how much.” Garner, supra, at 488 (footnote
omitted).

The Court stated in both that it was forced simply to

divine the will of Congress by implication

“We must spell out from conflicting indications of
will the area in which state action is
still permissible.” Garner, supra, at 488.

From the acorns of these two very sensible decisions
has grown the mighty oak of this Court’s labor pre-
emption doctrine, which sweeps ever outward though still
totally uninformed by any express directive from Con-
gress. The National Labor Relations Board, organized
management, and organized labor have vied with each
other in urging the Court to sweep into the maw of labor
relations law concerns that would have been regarded as

totally peripheral to that body of law by the Congresses
which enacted the Wagner Act and the Taft-Hartley Act.

16a

Today we are told that a eity, not seeking to place its
weight on one side or the other of the scales of economic
warfare, may not condition the renewal of a taxicab
franchise on the settlement of a labor dispute. The set-
tlement of that dispute would have enabled the company
to put its taxis back on the streets where the franchise
presumably contemplated they would be. The Court says
that since the Labor Board may not structure an ideal
balance of collective-bargaining weapons, the city may
not consider the existence of a labor dispute in deciding
whether to renew a franchise. See ante, at 619-620 [12a-
13a]. We are further told that because a State may not
legislate to provide uninterrupted service to the public by
prohibiting a strike of public utility employees, a city may
not act upon its views of sound transportation policy to
refuse to renew a taxi franchise unless the franchisee
settles a labor dispute and returns its cabs to the pur-
pose for which the franchise exists. See ante, at 617-618
{lla-12a]. Such sweeping generalizations commend
themselves neither to common sense nor to whatever
hypothetical “intent of Congress” as can be discerned in
an area so remote from the core concerns of labor-
management relations addressed by federal labor law.

Federal pre-emption of state law is a matter of con-
gressional intent, presumed or expressed. Because Con-
gress cannot foresee the various ways in which state
laws might rub up against the operation of federal stat-
utes, the Court in a multitude of cases has held state
regulation pre-empted even when Congress has not ex-
pressed any intent to pre-empt because of the danger that
the existence of federal and state regulations side by side
will interfere with the achievement of the objectives of
the federal legislation. The entire body of this Court’s
labor law pre-emption doctrine has been built on a series
of implications as to congressional intent in the face of
congressional silence, so that we now have an elaborate
pre-emption doctrine traceable not to any expression of

17a

Congress, but only to statements by this Court in its
previous opinions of what Congress must have intended.

The Court today doffs its hat to the legislative history
of the Wagner Act and comes up with the following
three items:

1 The Senate Report states: ‘Disputes about
wages, hours of work, and other working conditions
should continue to be resolved by the play of com-
petitive forces. This bill in no respect regu-
lates or even provides for supervision of wages or
hours, nor does it establish any form of compulsory
arbitration.’

2] Senator Wagner, sponsor of the NLRA, said
that the Board would not usurp the role of free col-
lective action.

3] Senator Wagner affirm[ed] that the Act en-
courages ‘voluntary settlement of industrial dis-
putes.’” Ante, at 617 [10a] (citations omitted).

These three bits of legislative history furnish absolutely
no support for the result of the Court reaches teday. The
observations that the Wagner Act leaves it to the parties
to resolve their disputes by the play of competitive forces,
that the Labor Board would not usurp the role of free
collective action, and that the Act encourages voluntary
settlement of industrial disputes, simply do not speak to
the question whether a city may condition the renewal
of a taxicab franchise on the settlement of a labor dis-
pute. I do not believe that Congress intended the labor
law net to be cast this far, and I therefore dissent.

18a

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

No. 87-6074
D.C. No. CV-81-1519-AAH

GOLDEN STATE TRANSIT Cokr., a California corporation,
d/b/a Yellow Cab of Los Angeies,
Plaintiff-Appellant,
v.

City oF Los ANGELES, a municipal corporation,
Defendant-A ppellee.

Appeal from the United States District Court
for the Central District of California
A. Andrew Hauk, District Judge, Presiding

Argued and Submitted
February 2, 1988—Pasadena, California

Filed September 15, 1988

Before: J. Clifford Wallace, Arthur L. Alarcon and
Robert R. Beezer, Circuit Judges.

Opinion by Judge Beezer; Concurrence by Judge Alarcon

Zachary D. Fasman and Ward L. Smith, Crowell &
Moring, Washington, D.C., for the plaintiff-appellant.

John F. Haggerty, Assistant City Attorney, Los An-
geles, California, for the defendant-appellee.

19a

OPINION
BEEZER, Circuit Judge:

In Golden State Transit Corp. v. City of Los Angeles,
475 U.S. 608, 618 (1986), the Supreme Court held, that
the City of Los Angeles (“City”) could not condition re-
newal of a taxi company’s franchise on settlement of a
labor dispute. The Court observed that such an action
“destroyed the balance of power designed by Congress
in the National Labor Relations Act], and
Congress’ decision to leave open the of
weapons.” Id. at 619. The Court concluded that

was remanded to the district court for further proceed-
ings.

On remand, appellant Golden State Transit Corpora-
tion (“Golden State”) sought damages from the City for
nonrenewal of its franchise. The district court concluded
that it had the authority to grant injunctive relief and
also ancillary monetary relief, but that it did not have
the authority to grant compensatory damages unuer 42
U.S.C. § 1983, based on an alleged NLRA violation or
Supremacy Clause pre-er:piion. The Court also found
that it did not have the authority to award damages un-
der any inherent power it possessed. The district court
certified the question for interlocutory appeal. Golden

at 619-20. The facts preceding the Supreme Court deci-
sion are as follows:

In early 1980, Golden State, which operated a taxicab
company, applied to the City for renewal of an operating
franchise. Golden State operated 400 cabs. The fran-
chise was due to expire on March 31, 1981.

In October 1980, before the renewal decision was taken
up by the City, a labor contract with Golden State’s
drivers expired. A short-term labor contract was nego-
tiated between Golden State and its drivers, to end on
February 10, 1981.

On February 11, 1981, Golden State’s drivers struck.
In view of the strike, the City postponed action on re-
newal of Golden State’s franchise until February 17,
1981.

On February 17, 1981, the City Council decided to ex-
tend Goldau State’s franchise from March 31, 1981 to
April 30, 1981, on condition that, prior to March 27,
1981, the Council decided that

|

tion renewal of Golden State’s taxicab franchise on settle-
ment of its labor dispute. See Golden State, 475 U.S. at
610-11. A subsequent motion to extend the franchise
was defeated.

On March 31, 1981, the Golden State Taxicab fran-
chise expired.

ers, AFL-CIO v. Wisconsin Employment Relations Com-
m'n, 427 U.S. 132 (1976), the City’s action interfered
with the free play of economic forces’ [citation omit-
ted] in collective bargaining between the compan

its drivers, Golden State, 475 U.S. at 614, and that such
a local action—conditioning franchise renewal on labor

gaining was precisely the conduct which “ ‘Congress in-
tended to be unregulated.’” Golden State, 475 U.S. at
614, cuoting Metropolitan Life Ins. v. Massachusetts,
471 U.S. 724, 749 (1985). The Supreme Court agreed

with Golden State that the NLRA preempted this action
by the City.

the fair market value of Golden State’s assets
date of the City’s action, less any sum Golden State
ceived pursuant to bankruptcy proceedings.

authority to grant additional compensatory damages to
Golden State.

Following full briefing and argument, the district
court concluded that it did not have authority to
further compensatory damages. The court cited three
reasons: First, Golden State was not entitled to damages
under 42 U.S.C. § 1983 for the alleged NLRA “violation”
by the City. Second, while the Supremacy Clause pre-
empted State law, it did not entitle Golden State to dam-
ages under 42 U.S.C. § 1983. Third, the district court
nad no inherent authority to award further damages.

On April 23, 1987, the district court stayed trial on

the amount of ancillary monetary relief to certify the
compensatory damage question for interlocutory appeal.

Golden State timely appeals. We have jurisdiction pur-
suant to 28 U.S.C. § 12$2(b).

;
)
1
at

:

:

Fz
if
157

i

:

88
5
i
1
ee

enforceable rights, privileges, or immunities within the
meaning of section 1983.” Id. at 422.

(1987), we stated “(slection 1983, as interpreted
Thiboutot [citations omitted] and its progeny, enforces
federal statutory rights only against direct violations of
the federal statute in question.” 810 F.2d at 851, n.9;
see also Pennhurst, 451 U.S. at 28; Middlesex County
Sewerage Authority v. National Sea Clammers Ass'n,
453 U.S. 1, 19 (1981) (section 1983 requires that “a
federal statute [be] . . . violated”).

Here, the federal statute in question is the NLRA.
The provision at issue is section 80d), as amended, 29
U.S.C. § 158/d).

Generally, this statute imposes mutual obligation s]!“
upon “the employer and the representative of the em-
ployees” to “bargain collectively” and “in good faith.”

Specifically, 29 U.S.C. 158 0a and (b impose obli-
gations on “an employer” and on “a labor organization.”
Actions of a third-party, not employer or employee labor
organization, do not give rise to a claim for damages
against the third-party under these provisions.

Since the City was at no time party to the collective
bargaining agreement, the City cannot be subject to a
section 1983 action premised on a party's alleged viola-
tion of 2° U.S.C. § 158. We do not believe that the NLRA
was intended to transform actions of third-parties’, nei-

t
by trustees for an employment benefit trust under 29
U.S.C. § 158/d), we noted:

We do not reach the merits of the trustees’ section
8(d) [section 158 0d)] theory, however, for we have

395 Health & Welfare Trust Fund v. Conquer Cart-
age Co., 753 F.2d 1512, 1515-17 (9th Cir. 1985).

Waggoner v. Dallaire, 767 F.2d 589, 592 (9th Cir. 1985),
cert. denied, 475 U.S. 1064 (1986).

Since the City did not violate a provision of the NLRA,
and since Congress has limited relief for such an action

IME

, 447 US. 752. 764 (1980).
to
Bell v
U
arcotics,

11721175
10
Hite

100 111 35 iy
110 15 1211515 Fr Bl ale

i li SUE LANE
i th 111178 : a it bs: 25 it F
imm UAE HAT Ha is
13 21 11515 iil 145 fee i: i 11
N 1 110 111 li . 1
an e ee
ii 1 1115 73251 7215 Hat TUE li
Bee Gee seein oie

3

2
.
|
|

right. See White Mountain Apache, 810 F.2d
at 848. Accordingly, the inherent authority to grant re-
lief in order to secure an individual right under the in-
herent authority of the federal courts may not be exer-
cised here.

Section 1983 was intended to supplement remedies pro-
vided by the States. However, McNeese v. Board of Edu-
cation, 373 U.S. 668, 671 (1966), Alan v. McCurry, 449
U.S. 90 (1980), and Monroe v. Pape, 365 US. 167
(1961), do not support the proposition, argued by Golden
State, that inherent authority exists in the federal courts
to award compensatory damages where section 1983 dam-
ages are unavailable. Toll v. Moreno, 458 U.S. 1 (1982),
involved enforcement of a stay preserving issues for ap-
peal; that case provides no guidance in resolving the

raised here. On the facts in

liams (White Mountain), 810 F.2d 844 (9th Cir.), cert.
Ct. 940 (1987). In White Mountain we

=
90

I write separately on the issues discussed in Rubric

Section 1983 reads as follews:

Every person who, under color of any statute, ordi-
nance, regulation, custom, or usage, of any State or
Territory or the District of Columbia, subjects, or
causes to be subjected, any citizen of the United
States or other person within the jurisdiction there-
of to the deprivation of any rights, privileges, or
immunities secured by the Constitution and laws,
shall be liable to the party injured in an action at
law, suit in equity, or other proper proceeding for
redress. For the purposes of this section, any Act of
Congress applicable exclusively to the District of
Columbia shall be considered to be a statute of the
District of Columbia.

(Emphasis added). One month before the final decision
in White Mountain was filed, the Supreme Court, in
Wright, 107 S. Ct. at 771, said that under its prior rul-
ings, “if there is a state deprivation of a ‘right’ secured

by a federal statute, § 1983 provides a remedial cause of
action... We did not discuss Wright in our decision
in White Mountain.

to use economic weapons. Id. at 615-16.

In the case sub judice, the City of Los Angeles de-
prived Golden State of the statutory right to engage in
the collective process free from third-party
interference. 29 U.S.C. § 158(d) ; Golden State, 475 U.S.
at 618. Thus, under Wright, Golden State would appear
to have a cause of action for damages under section 1983.
However, because third party interference is not expressly
prohibited by the NLRA, the City did not directly violate
the statute. Therefore, while the City interfered with
Golden State’s rights, White Mountain compels us to
hold that section 1983 damages are not available because
there was no direct violation of a statute by the City.

Therefore, I do not join in that of the
opinion and offer no opinion as to what ruling would be
made if it were necessary to reach the issue.

I concur in the remainder of the opinion.

f

= en ee ee Ne

CONSTITUTIONAL AND STATUTORY
PROVISIONS INVOLVED

UNITED STATES CONSTITUTION
ARTICLE VI, CLAUSE 2

Constitution, and the Laws of the United States

NATIONAL LABOR RELATIONS ACT,
SECTION 8(d), AS AMENDED,
29 U.S.C. § 158 (d

(d) For the purposes of this section, to bargain col-

meet at reasonable times and confer in good faith with
respect to wages, hours, and other terms and conditions

requested by either party, but such obligation does not

compel either party to agree to a proposal or require the
making of a concession... .

THE CIVIL RIGHTS ACT OF 1871
42 U.S.C. § 1983

Every person who, under color of any statute, ordi-
nance, regulation, custom, or usage, of any State or
Territory or the District of Columbia, subjects, or causes
to be subjected, any citizen of the United States or other
person within the jurisdiction thereof to the deprivation
of any rights, privileges, or immunities secured by the

OPPOSITION
BRIEF

Bowne of Los Angeies. Inc. Law Printers (213) 742-4600

PARTIES TO THE PROCEEDINGS BELOW

All Parties to the proceedings below subject to this
petition for a writ of certiorari are set forth in the caption

of the petition.

N

TABLE OF CONTENTS

QUESTION PRESENTED ....................

PARTIES TO THE PROCEEDINGS BELOW...

STATEMENT OF TERE CASE .................

POST REMAND PROCEEDINGS .............

DECISION BELUUVUVWGWW

REASONS FOR DENYING THE WRIT........
I

REFUSAL TO GRANT DAMAGES DOES NOT
NEGATE THIS COURT’S DECISION IN
GOLDEN STATE TRANSIT CORP. V. CITY OF

II

THE RULING BELOW IS IN CONCERT WITH
THIS COURT'S INTERPRETATION OF 42
U.S.C. SECTION 1906?ù%//0:sm.

III

SECTION 1983 RELIEF IS NOT APPROPRI-
ATE IN PREEMPTION CASES .............

SE BBG uS bec ccsccceseoecccccccccces

iv
TABLE OF AUTHORITIES
Cases
Page
Bell v. Hood, 327 U.S. 678 (1946) .............. 8
Bivens v. Siz Unknown Named Agents of the Fed.
Bureau of Narcotics, 493 U.S. 388 (1971) ...... —
Brown v. Hotel and Restaurant Employees and Bar-
tenders Union Local 54, 468 U.S. 491 (1984) ... 12,13
Chapman v. Houston Welfare Rights Organization,
r e 8, 13
Consolidated Freightways Corp. v. Kassel, 637 F.2d
F so ncecnesdcesasdbeneceres 12
Fauz-Burhans v. County Com’rs of Frederick
County, 674 F.Supp. 1172 (D.Md. 1987)....... 15
Golden State Transit v. City of Los Angeles, 475 U.S.
K 3, 4, 7, 10, 11
Gould, Inc. v. Wisconsin, 750 F.2d 608 (7th Cir.
1984), affirmed on other grounds, 475 U.S. 282
eee ene eee eee 14
J&J Anderson v. Town of Erie, 767 F.2d 1469 (10th
D gnndeabedaedsseaesbsaseoes 14
Kennecott Corp. v. Smith, 637 F.2d 181 (5th Cir
eee 12
Machimsts v. Wisconsin Employment Relations Com-
mission, 427 U.S. 132 (1976))))7/⸗ 13
Maine v. Thihoutot, 448 U.S. 1 (1980) ........... 9
Middlesex County Sewage Authority v. National Sea
Clammers, Assn., 453 U.S. 1 (1981) ......... 9,11,12
New York Airlines, Inc. v. Dukes County, 623
F.Supp. 1435 (D. Mass. 1985) ............... 15
Owen v. City of Independence, Mo., 445 U.S. 622
eee eee 7

5

*

TABLE OF AUTHORITIES
CASES

Pennhurst State School and Hospital v. Haldeman,
reer. eee 9, 11

Pesticide Public Policy Foundation v. Village of
Wauconda, F.Supp. 423 (N.D. 511 1985)

affirmed 826 F.2d 1068 (7th Cir. 1987)........ 14
Pirolo v. City of Clearwater, 711 F.2d 1006, rehear-

ing denied, 720 F.2d 688 (11th Cir. 1983) ..... 14
Private Truck Council of America, Inc. v. Quinn, 476

rere eee ee ce 12
San Diego Building Trades Connell etc. v. Garrison,

iD

53
2
.

8

:
5
:
:
2

:
.
:

3. Revise Section 4.2(e) to read as follows:

z

4.2(e) All taxicabs operated on behalf of
shall be under the
the Grantee. All
leasing contracting to
terminated

i

i

0
ia
11

34

employee arrangement. Beginning on
July 2, 1981 Grantee shall not be per-
mitted to provide taxi service through
a contracting or leasing type opera-
tion with a driver-owner, but only by

35
EXHIBIT 7

CITY OF LOS ANGELES
INTER-DEPARTMENTAL CORRESPONDENCE

the operation of its taxicabs by em- E14
ployees and officers of the grantee. Date: January 26, 1981
Any such authorization which may To: Councilwoman Pat Russell, Chairwoman,
have been granted to franchisee, or Transportation and Traffic Committee
any predecessor in interest of fran- Attention C. B. Pruner, City Clerk’s Office,
chisee, is accordingly hereby revoked. 395 City Hall
B. Modifications to Probationary Franchise From: Board of Transportation Commissioners,
1. Redesignate as a one year franchise. 1200 City Hall
2. Revise the second and third paragraphs of Subject: RENEWAL OF EXISTING TAXICAB FRANCHISES
Section 2.2.

Second paragraph revised as follows:
This franchise shall expire March 31, 1982.

The franchise will then only be renewed at
the discretion of the Council, upon its adop-
tion of the necessary ordinance, and provided
the Grantee has demonstrated, to the satis-
faction of the Board, continuous compliance
with all franchise terms and conditions and
specifically the following:

(a) Payment of franchise fees; (b) Compli-
ance with all rules regarding leasing/con-
tracting operations; (e) Furnish waybills
and dispatch records; (d) Maintain mini-
mum number of vehicles required by fran-
chise; and (e) Compliance with Affirmative
Action provisions of franchise.

Third paragraph be eliminated.

Council Files 80-1717, 80-2070, 80-1643, 80-1485, 80-1709
80-1642, 80-1358, 77-1167, 80-1608, 80-1356, 80-1787,
80-2101, 80-1246, 80-1365

The franchises of all thirteen (13) existing taxicab com-
panies in the City expired on October 29, 1980. They
were subsequently extended, by Council actions, to March
31, 1981 in order to allow sufficient time for the Council
to review the Board’s September 3, 1980 recommenda-
tions on replacement franchises.

The Transportation and Traffic Committee at their
meeting of December 10, 1980 considered the renewal of
the thirteen franchises including the matter of leasing to
driver-owners by franchised taxicab companies. The Com-
mittee recommended that the matter of leasing to driver-
owners by franchised taxicab companies be referred back
to the Board to request that the Board consider alterna-
tives for the accommodation of driver-owners whose
authority to lease would be discontinued by the terms of
the proposed franchises. The Board was also requested
to include any necessary modifications to the proposed
franchises.

36 37

At its regular meeting on January 22, 1981, the Board Section read substantially in accordance with the ac-
of Transportation Commissioners approved certain revi- companying draft.

sions to their September 3, 1980 recommendations to In additi th ;

Council on this matter. The revisions are discussed in ad — — * ie above recommendations, the Board
detail on the attached Board approved report. — — e following resolution by Commissioner Michael

The following represents the Board's original recom- 7 *
mendations as revised and is submitted for your action. I move that all existing authorities for leasing of

1. That a multi-year replacement taxicab franchise, that taxicabs by franchised companies to driver-owners,

f ; , , granted by the Board pursuant to 71.15 of the Mu-
will expire on March 31, 1985, in accordance with the * . 8 0 u
attached draft be granted to: nicipal Code, be rescinded on a phased basis, that the

companies be instructed to terminate the driver-owner
LUPE, INC. relationship upon completion of their one-year con-
GOLDEN STATE TRANSIT Co. tract and in no event later than July 1, 1981, and that
CELEBRITY PRIVATE CAR SERVICE | the City Council be advised of this action of the
WILMINGTON CAB COMPANY Board.”

pe Bente Ane age Reg | This matter is being returned for your action.

2. That a one-year franchise, which will expire March
31, 1982, with a provision that it will then only be /s/ Joy Ventura
renewed at the discretion of the Council, upon its JOY VENTURA
adoption of the necessary ordinance and provided the Acting Secretary
Grantee has demonstrated to the satisfaction of the Board of Transportation
Board continuous compliance with all franchise terms Commissioners
— and conditions, be granted to the following: IR: jev 9

A & WCABCO. Attachments
HIGH LAND TRANSIT co.
YELLOW CAB COMPANY OF CULVER ec: All Franchised Operators

CITY, INC. |
JAMES D. MITCHELL
SOUTHERN CALIFORNIA TRANSIT co.
RED AND WHITE CAB CO.
LOS ANGELES CITY CAB COMPANY, INC.

3. That any change in ownership of the grantee shall be
subject to Council approval.

4. That the Council amend Section 71.05(b) of the Los
Angeles Municipal Code to provide for an increase in
vehicle permit fees for taxicabs and that the revised

38
EXHIBIT 8

TO THE COUNCIL OF THE
CITY OF LOS ANGELES

77-1167, 80-1246, 80-1356, 80-1358, 80-1365, 80-1485,
80-1608, 80-1642, 80-1643, 80-1709, 80-1717, 80-1787,
80-2101, 80-2070, 80-4592, 77-1337, 77-5255, 76-105 &

Your TRANSPORTATION AND TRAFFIC Commit-
tee reports as follows:

RECOMMENDATION

In order to provide for the replacement of all thirteen
existing taxicab franchises due to expire on March 31,
1981 and to provide for an increase in vehicle permit fees
for taxicabs, we RECOMMEND, as recommended by the
Board of Transportation Commissioners, as follows:

1. That the accompanying six ordinances, granting a
multi-year replacement taxicab franchise, that will
expire on March 31, 1985, for the following six
existing taxicab franchises, approved as to form
and legality by the City Attorney, BE PLACED

UPON THEIR PASSAGE:
(Original Or As Assigned)
Franchise Ordinance No.

Council
Company Area File No.
h Transportation, Inc. 149,002 A 80-1717
3 a 153,951 B,C 80-1643
*Golden State Transit Corp. 140,825 B,C,D 80-1485

The F. Michael Crawford Corp. 151,680 B-1 80-1709
Celebrity Private Car Service 149,429 B-1 80-1642

ngton 6
Wilmi Cab Co. 146,501 E 80-124
8 149,699

* Deleted and Continued to Feb. 17, 1981 [This line struck
through in original document]

2. That the accompanying seven ordinances, granting
a one-year franchise, which will expire March 31,
1982, with a provision that it will then only be
renewed at the discretion of the Council, upon its
adoption of the necessary ordinance and provided
the Grantee has demonstrated to the satisfaction of
the Board continuous compliance with all franchise
terms and conditions, for the following seven exist-
ing taxicab franchises, approved as to form and
legality by the City Attorney, BE PLACED UPON

THEIR PASSAGE:

(Original Or As Assigned)

Franchise Ordinance No.
Council
Company Area File No.
Southern California Transit Co. 146,498 A 80-2070
**A & W Cab Company, Inc. 153,851 C 80-1358
High Land Transit Co. 149,802 C-1 77-1167
80-1608
Red and White Cab Co. 146,499 C-2 80-1356
Yellow Cab Co. of Culver City, Inc. 151,570 D 80-1787
James D. Mitchell 153,331 D 80-2101
Los Angeles City Cab Co., Inc. 149,803 B-2 80-1365

** Deleted and Referred back to Board of Transportation Com-
missioners, Substitute Ordinance Adopted extending existing
franchise to May 31, 1981. [This line struck through in
original document]

8. That the Council be advised that all the franchise
ordinances include the following provisions:

a. That any change in ownership of the grantee
shall be subject to Council approval.

b. That all taxicabs operated on behalf of the fran-
chise shal] be under direct control of the grantee,
requiring all present leasing/contracting to
driver owners to be terminated immediately
upon completion of the lease/contract but no

40

later than July 1, 1981. Grantee shall offer to
employ all such affected drivers under an em-
ployer-employee arrangement. Thereafter, the
operation of the taxicabs will be only by em-
ployees and officers of the grantee.

e. That all taxicab operators participate in the
City-sponsored transportation coupon (user-side
subsidy) program.

d. Grantee is to make a base franchise payment of
$41.67 per month for each sealed taxicab (equals
$500 per year) with an incremental increase of
up to doubling of the payment based on the level
of services. This is similar to the fees for the
two associations in Recommendation No. 4.

4. That the accompanying ordinance amending Section
71.05(b) of the Los Angeles Administrative Code to
provide for an increase in vehicle permit fees for
taxicabs of the existing associations from $250 an-
nually to $500 per year, with an incremental in-
crease of up to $500 per year based on the level
of service, approved as to form and legality by
the City Attorney, BE PLACED UPON ITS PAS-
SAGE.

SUMMARY

The franchise of all thirteen existing taxicab companies
in the City expired on October 29, 1980. They were sub-
sequently extended, by Council actions, to March 31, 1981
in order to allow sufficient time for the Council to review
the Board’s recommendations on the matter.

The Comprehensive Taxicab Study, as approved by the
Board on September 3, 1980, recommends extensive up-
grading of franchise terms and conditions as the fran-
chises are renewed.

At a special meeting held on September 3, 1980, the
Board in summary approved the following recommenda-
tions: ~

—

41

1. Five-year replacement taxicab franchises for five
companies.

2. A four-month probationary franchise with the pro-
vision for extension to five years on affirmative
findings of compliance by the Board for seven com-
panies.

3. Denial of application for renewal for one company.

4. Changes of ownership be subject to Council ap-
proval.

5. That Section 71.05(b) of the Los Angeles Municipal
Code be amended to provide for an nerease in
vehicle permit fees for associated taxicabs.

The Transportation and Traffic Committee at its meeting
on December 10, 1980, in considering the recommenda-
tions of the Board for renewal of the thirteen franchises
including the matter of leasing to driver-owners by fran-
chise taxicab companies, submitted the franchises back to
the Board for any necessary modifications and considera-
tion of alternatives for the accommodation of driver-
owners whose authority to lease would be discontinued by
the terms of the proposed franchises.

The Department reviewed all of the thirteen companies
and updated the status of each in regard to their eligibil-
ity for a multi-year franchise. In lieu of the original rec-
ommendations, the Board recommended that a multi-year
replacement taxicab franchise, to expire on March 31,
1985, be granted to six franchisees.

The Department also recommended that a one-year fran-
chise, to expire on March 31, 1982, with a provision for
renewal to March 31, 1985 upon affirmative findings by
the Board of continuous compliance with all terms and
conditions thereof and approval by ordinance, be granted
to seven companies.

The Board not only recomended substantial changes in
the types of franchises to be provided but also recom-

42

mended certain changes as to the status of the individual
franchise companies under the full term versus provi-
sional franchise.

The six companies listed in Recommendation No. 1 (full
term) are in compliance with all terms and conditions of
their franchise including these five specific conditions:
(a) Payment of franchise fees; (b) Compliance with all
rules regarding leasing—cortracting operations; (c) Fur-
nish waybills and dispatch records; (d) Maintain mini-
mum number of vehicles required by franchise; and
(e) Compliance with Affirmative Action provisions of
franchise.

Monarch Transportation, Inc. and The F. Michael Craw-
ford Corp. were added to the 4-year list while Red and
White Cab Company is now recommended for a one-year
franchise due to possible violations of the rules regarding
leasing/contracting operations with driver-owners.

Under Recommendation No. 2, A&W Cab Company, High
Land Transit Company, Yellow Cab Company of Culver
City, Inc., Southern California Transit Company, and
possibly James D. Mitchell are also in violation of rules
regarding leasing/contracting with driver-owners. South-
ern California Transit Company does not have its
required 30 vehicles in service yet.

The Board originally recommended that Los Angeles City
Cab Co., Inc. lease not be renewed based upon numerous
violations of the franchise terms and conditions of the
franchise and Department: directives as enumerated in
the Department staff report. In the past four months,
however, City Cab has been actively involved in bringing
its operation in compliance with the franchise terms and
conditions and Department directives. Insurance prob-
lems have been resulved and the Company has eliminated
all but three of its illegal driver-owners and is in the
process of resolving this matter The Department has
been receiving requested records and documents from the

43

Company. The Department therefore now recommends
that this franchise be included under Recommendation
No. 2 for a provisional one-year franchise.

It is noted that the one-year provisional franchise will
allow the Department an opportunity to periodically re-
view compliance with all franchise terms and conditions
and develop the proper recommendation for extension to
March 31, 1985. It will provide a period of time in which
the companies must phase out their driver-owners and the
Department can monitor the phase-out to determine com-
pliance by July 1, 1981. 4

The proposed terms of the new franchises requiring the
elimination of the franchise company’s lease authority
with driver-owners will create a problem that is difficult
to resolve. The Department has explored this problem for
a possible solution that would be acceptable to the driver-
owners, companies and City.

The Department estimates that a total of at least 149
driver-owners, including 60 that are unauthorized, would
be affected by the elimination of the authority for leases
and contracts between franchise con.panies and driver-
owners. The Department studied several alternatives for
absorption of the driver-owners, e.g. driver-owners to be
absorbed by the two existing independent associations;
permit driver-owners to form a new independent associa-
tion; or driver-owner to be*sme an employee. It was con-
cluded that the independent associations’ options were not
viable and that the most feasible solution to the problem
is to combine a phase-out of driver-owners (as contracts
run out) with a requirement that each company offer to
hire driver-owners us employees. The leasing and con-
tracting to driver-owners is to be terminated as the agree-
ments lapse and in no event later than July 1, 1981. It
was noted that many of the present agreements were
signed in early 1980 for a one-year period with option

44

to renew, conditioned upon continued sanction by the City
of Los Angeles.

The former driver-owners would have the option of being
hired as commission drivers or as fixed fee employees
(pass-through) drivers. In either case they would be
employees of the company, utilizing company taxis, and
be provided, pursuant to Federal and State statutes, full
social benefits, i.e., Social Security, Unemployment Insur-
ance and Workers’ Compensation.

There are various alternatives possible insofar as the
current driver-owners who own their own taxicabs. They
could sell their vehicle to the company through a contract
that would allow the driver-owner an opportunity to
recover his investment in the vehicle and provide a credit
on his initial “sign-up” fee; it could be a direct sale of the
vehicle to the taxicab company; and there could be an

arangement where a taxi could be sold to a leasing com-

pany for an interest in the company and subsequently
leased, as suggested by A & W Cab Company or High
Land Transit, and become part of the company’s taxi
fleet.

Converting the driver-owner to an employee and absorb-
ing his vehicle into the company’s com mission fleet will
provide the driver with the protection of social benefits,
which the Board of Transportation Commissioners has
vigorously advocated, and at the same time provide a
posi‘ive control of the driver and vehicle.

On November 20, 1980, the Board of Transportation
Commissiez.crs approved the Department’s recommenda-
tion to include in the new taxicab franchises a require-
ment that all operators participate in the City-sponsored
transportation coupon (user-side subsidy) program.

Your Committee conducted a public hearing with regard
to the subject renewal of taxicab franchises, with no ap-

ü—ä—ñZ—ä — — —..ʒfß — —

45

parent dissent by the involved franchisees. There was no
response from the representatives of the (A&W) owner-
driver association. The representatives of the independent
associations suggested that the franchise operators should
not be allowed to lease at all, whether employees or not,
and they felt that there was favoritism in the provisions
of the franchises toward the franchise companies in rela-
tionship to the desires of the associations. The Teamsters
Union, which represents the empleyees of the Yellow
Cab Company, indicated support for the franchise
provisions.

The franchise renewals provide a fixed franchise fee of
$41.67 per month ($500 per year) with an incremental
increase of up to doubling of the payment, based cn the
level of service, similar in impact to the new fees being
recomended for the two associations. The grantees pre-
viously were paying 1% of the total gross receipts from
their taxicab operations, which is estimated at $50,000 of
receipts per year per cab, with up to an incremental addi-
tional 1% based on level of service. This new payment
should approximate the receipts from the old method but
will be easier to administer.

The Yellow Cab Company indicated that it should not
have to pay fees for taxicabs that are “out of service.”
The Department indicated that usually these taxicabs are
out of service only temporarily and that any permanently
disabled taxicabs could be administratively credited.

The two associations fee] that their vehicle permit fees
should not be increased from $250 annually to $500
annually, with a concurrent doubling of the incremental
increase based on the level of service. The associations
feel that they should not have to pay the $500 in one
lump sum and should be able to pay in monthly install-
ments similar to the payments by the francisees for their
sealed taxicabs. The Department indicated that it would

46

review this request and the feasibility of collecting the
fees from the associations rather than individual taxicab
owners.

Respectfully submitted,

TRANSPORTATION AND TRAFFIC
COMMITTEE
CBP:jd
2-2-81 |

[Motion adopted to approve Comte. Rec. Feb. 11, 1981—
Los Angeles City Council as amended to the Mayor forth-
with—* Ord. relating to Golden State Transit Corp. de-
leted and continued to Feb. 17, 1981]

47
EXHIBIT 11

MINUTES OF MARCH 23, 1981,
CITY COUNCIL MEETING

March 23, 1981
Council File No. 80-1485
Item No. 14

At this point in the proceedings, Mrs. Russell was rec-
ognized in keeping with Item No. 14 on this day’s Coun-
cil Calendar.

Mrs. Russell presented the following Motion and moved,
seconded by Mr. Farrell, its adoption:

MOTION

WHEREAS, the taxicab franchise granted to Golden
State Transit Corporation, dba Yellow Cab Company, to
operate upon certain streets in the City of Los Angeles,
is presently due to expire March 31, 1981; and

WHEREAS, the City Council did previously act to
extend such franchise to April 30, 1981, provided it was
determined, on or before March 27, 1981, that it is in the
best interest of the City to allow for such extension; and

WHEREAS, there are presently uncertainties relating
to such franchise which will require investigation by the
Department of Transportation ; and

WHEREAS, it would not be in the best interest of the
City to allow for such franchise to expire March 31, 1981;

NOW THEREFORE, it is hereby found and deter-
mined that it is in the best interest of the City to allow
for such extension to April 30, 1981.

Moved by /s/ Pat Russell
PaT RUSSELL
Councilman
Sixth District

Seconded By /s/ Robert Farrell
Mar. 23, 198!—Failed of Adoption]

48

The subject, as indicated on the Calendar, was consid-
eration of possible findings required under Ordinance No.
154,931 to extend the terms of the taxicab franchise
(Golden State Transit Corporation dba Yellow Cab Com-
pany), from March 31, 1981 to April 30, 1981.

Mrs. Russell moved, seconded by Mr. Farrell, that a
Public Hearing of ten minutes duration be authorized to
hear from those persons in the audience that wished to
express their views.

The motion for Public Hearing was approved by unani-
mous vote.

The Council then heard from the following persons:
Eugene Maday; Hugo Morris, Joint Council of Teamsters
No. 42 and Local 572; David I. Shapiro; and Steve
Robertson, Los Angeles Federation of Labor.

While each ofthe foregoing speakers expressed their
own views, stated during the commentary were concerns
by Mr. Maday that the City was interveaing in a labor
dispute (by the actions being considered) involving the
company and the Teamsters. The other speakers indi-
cated that no great taxicab shortage had taken place dur-
ing the period of time the franchise holder taxicab was
out of operation. It was also the labor organization
speaker’s contention that the employer (Yellow Cab) was
bargaining “in bad faith” with the taxicab drivers em-
ployed by that company, thus to grant an extension of
time and/or grant a further franchise to the company
would not be in the drivers interests.

After the foregoing speakers had expressed their views,
and as there were no other persons in the audience that
wished to address the Council on the subject, the Public
Hearing was closed.

At this point in the proceedings the following persons
were assembled at the table within the Council semi-circle
to answer questions and/or make statements if called

49

upon to do so: Donald Howery, General Manager, De-
partment of Transportation; Neil Clark, Principal Trans-
portation Engineer, Department of Transportation; and
John Haggerty, Assistant City Attorney, Office of the
City Attorney.

The measure was debated at length and during the
commentary Mr. John Haggerty, representing the City
Attorney’s Office, advised the Council that the findings
referred to in Mrs. Russell’s Motion would have to be
approved by the Council by March 27, 1981 if the exten-
sion indicated in the Motion was to be authorized. If the
extension was granted, an ordinance granting a new taxi-
cab franchise to Yellow Cab Company would have to be
approved by the Council, signed by the Mayor and pub-
lished on or before March 31, 1981, if, in fact, the indi-
cated company was to retain the franchise. The franchise
could not be authorized at a later date, the Council was
advised, without the usual bidding procedure.

During the discussion, various Council members were
recognized and expressed their views.

Following all commentary, Mrs. Russell’s Motion failed
of adoption by the following vote: Roll — (2-10)

The Chair advised that the Motion had failed and
thereafter recognized Mr. Gibson. Mr. Gibson indicated
that it had been his intention to vote “No” on the Motion.

It was agreed that the record would show Mr. Gibson’s
intention, and theafter the Clerk was instructed to pro-
ceed with the next order of business.

50

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

No. 81-1519 AAH (Gx)

GOLDEN STATE TRANSIT CORPORATION,
a California corporation, doing business as
Yellow Cab of Los Angeles,
Plaintiff.
vs.

CiTy OF Los ANGELES, a municipal corporation,
Defendant.

DECLARATION OF EUGENE MADAY IN SUPPORT OF
APPLICATION FOR TEMPORARY
RESTRAINING ORDER

I, the undersigned, declare:

1. My name is Eugene Maday. I am the president and
controlling shareholder of plaintiff Golden State Transit
Corporation, d/b/a/ Yellow Cab of Los Angeles (“Yellow
Cab” hereafter). If called to testify as a witness, I would
testify completely to the following facts based upon my
personal knowledge.

BACKGROUND OF PLAINTIFF’S PURCHASE OF
YELLOW CAB

2. In or about 1977, Yellow Cab’s Los Angeles’ pre-
decessor was affiliated with the Westgate-California group
of companies and was in bankruptcy or receivership. The
bankruptcy receiver, Robert N. Mateer (“Mateer”) was
seeking a purchaser for the bankrupt’s assets, including
the Los Angeles City taxi franchise. At that time, the
bankrupt was not operating pursuant to its franchise

51

and was unionized. The bankrupt’s drivers were union-
ized through Teamster’s Local No. 670 and were repre-
sented by Hugo Morris (“Morris”) who also represented
Joint Council of Teamsters No. 42. Mateer and Morris
approached me and urged me to purchase the bankrupt’s
assets, including the franchise. Transfer of the franchise
was required to be approved by the Los Angeles City
Council (“City Council’’).

3. Richard Burlingame, an employee of the receiver
and former employee of the bankrupt told me that getting
the franchise renewed had always been automatic and
that no Los Angeles taxicab franchise had failed to be
renewed.

4. On or about April 1, 1977, Mateer told me there
would be no problem if I bought the Company in obtain-
ing the transfer of the existing franchise and even less
problem in getting it renewed. I caused Golden State
Transit Corporation to be formed to effectuate the
purchase.

5. On May 17, 1977, plaintiff paid the receiver ap-
proximately $550,000 for the assets, including the right
to use the name “Yellow Cab of Los Angeles” and, subject
to City Council approval, all rights under the existing
franchise.

6. On or about March 23, 1981, the president of Los
Angeles City Council characterized plaintiff’s purchase of
the old company, after several months of no taxicab serv-
ice in Los Angeles as bailing “the city out, not only with
his generosity, but with the aid and help of the [team-
sters] union.” A true and correct transcript of the City
Council hearing of March 23, 1981 is attached hereto,
marked Exhibit 15 and incorporated reference.

7. In early May, 1977, Plaintiff applied for City Coun-
cil approval of the franchise transfer. At that time,
Robert W. Russell was General Manager of the City of
Los Angeles’ Department of Public Utilities (now the

52

Department of Transportation) responsible for investigat-
ing proposed taxicab franchise transferees. About the
end of May, 1977, Mr. Russell visited my offices. He told
me personally that obtaining transfer of the Yellow Cab
franchise would “take a little work,” but that renewals
“had always been automatic.”

8. In July, 1977, the City Council approved transfer
of the franchise to plaintiff and the transfer was affected.
The transferred franchise was to expire October 29, 1980.

9. Thereupon, Yellow Cab undertook to and did oper-
ate pursuant to the franchise.

10. Upon plaintiff’s formation, I paid $250,000 to
plaintiff for all of its 25,000 shares of outstanding stock.
I remain sole owner of all of plaintiff’s outstanding stock.
Since then, I have paid $736,325 additional capital into
plaintiff and have personally advanced to plaintiff an
additional $685,301. I am sole shareholder of Leisure
Industries, Inc. which has loaned to plaintiff $427,172.

11. Since obtaining the franchise, plaintiff has pur-
chased more than three million dollars worth of vehicles
to improve and upgrade the quality of its fleet. Plaintiff
is the largest taxicab operator in the City of Los Angeles
with approximately 400 vehicles.

UNION AGREEMENT

12. Upon obtaining the franchise, plaintiff operated
pursuant to a collective -bargaining agreement with its
Teamster drivers. The agreement expired in October.
1980. Plaintiff continued to operate pursuant to interim
agreements with the Teamsters, but the parties continue
to dispute regarding wages and benefits. This dispute has
been and is subject to mediation by the Federal Mediation
and Reconciliation Service. Plaintiff has been and con-
tinues to act in good faith to resolve the dispute. On
February 11, 1981, plaintiff’s drivers went on and remain
on strike.

53

FRANCHISE RENEWAL

13. More than a year ago, on March 31, 1980, in
anticipation of the October, 1980 franchise expiration
date, Yellow Cab made written application to the City
for renewal of its franchise and paid its $200 application
fee (Exhibit 1 to Declaration of John B. Rice filed here-
with). On April 1, 1980, the application was referred to
the City’s Board of Transportation Commissioners
(“Board”) for report. At that time, all thirteen (13)
taxicab franchises in the City were also due to expire in
October, 1980, and all other franchises also applied for
renewals.

14. The Department of Transportation requested and
on July 14, 1980 received an extension until September
15, 1980 to report on the thirteen franchise applications.

15. Meanwhile, the City (by the staff of its Depart-
ment of Transportation) was engaged in a comprehensive
taxicab study which culminated in a Report dated Au-
gust 14, 1980 (Exhibit 12 attached hereto) which rec-
ommended that Yellow Cab and ten other franchisees be
granted six month probationary franchises to be extended
to five year franchisees under certain conditions. Yellow
Cab was then and is now in full compliance with these
conditions. The Report also recommended 5-year renewal
of one franchise and non-renewal of another franchise.

16. During 1980, the City Council granted temporary
franchise extensions to all thirteen operators, first until
December 31, 1980 and then until March 31, 1981 (Ex-
hibits 2 and 4 to Declaration of John Rice filed here-
with). Various reports and recommendations form the
staff of the Department of Transportation and Commis-
sioners culminated in scheduling City Council action on
long-term franchises for February 11, 1981.

17. But Yellow Cab and the Teamsters had still been
unable to agree to a long-term labor contract. A short-

54

term agreement was scheduled to expire at midnight
February 10, 1981 on the eve of scheduled Council action.

18. I am informed and believe and on such grounds
allege that the Teamsters determined to use the franchise
extension proceedings as a lever to force Yellow Cab to
accede to their demands.

19. By letters dated February 5, 1981, the Teamsters
notified the Mayor of Los Angeles and City Council of
their intention to strike Yellow Cab on February 11—
the date of scheduled Council action—unless an “accept-
able settlement” was achieved. Copies of these letters,
marked Exhibits 13 and 14 are attached hereto and incor-
porated herein by reference.

20. No settlement was reached and the Teamsters
struck Yellow Cab on February 11, 1981.

21. On that date, the Council’s Transportation and
Traffic Committee submitted a report (Exhibit 8 to Dec-
laration of John Rice filed herewith) to the Council
which recommended that the City pass ordinances grant-
ing four year franchises to Yellow Cab and five other
operators.

23. The report at page 4 specifically found that Yellow
Cab and those five other operators “are in compliance
with all terms and conditions of their franchise.”

24. According to what I have been told by Jack Arvan,
General Manager of plaintiff, Hugo Morris of the Team-
sters appeared before the City Council on February 11,
1981. He detailed the labor dispute and urged that, be-
cause of the dispute, the Council should not grant a full
four-year franchise to Yellow Cab. (See Declaration of
Jack Arvin filed herewith).

25. I am informed and believe and on such grounds
allege that because of Teamster opposition, the Council
continued consideration of Yellow Cab’s application to
February 17, 1981. But the other applicants were treated
differently. The council proceeded to grant four-year

55

franchises to the five other operators as well as cne-year
franchises to six additional operators. Also. the Council
nonetheless adopted the finding that Yellow Cab was in
compliance with all terms and conditions of its franchise
(Exhibit 8 to Declaration of John Rice filed herewith).

26. On or about February i7, 1981, Jack Arvan,
plaintiff’s General Manager, informed me that Bill Tico,
business agent for the Teamsters, had threatened that
“if Maday doesn’t settle his labor dispute, he’s going to
have a lot of truble renewing his franchise.” (Declara-
tion of Jack Arvin filed herewith).

27. On February 17, 1981, the Yellow Cab renewal
ordinance was not presented for adoption. Instead, at the
Teamster’s urging, and contrary to the Department of
Transportation recommendation, tke City Counci! adopted
a substitute ordinance to extend Yellow Cab’s franchise
only until April 30, 1981 and subject to the condition that
the Council make an affirmative finding that it was in the
“best interest” of the City of allow the extension. No
other franchise except Yellow Cab was subject to such a
condition. I am informed and believe and on such gr unds
allege that the City’s governing procedural ordinance
makes no provision for such a finding as a condition to
the grant of a renewal franchise.

28. On Sunday, March 22, 1981, Hugo Morris, the
Teamster representative, said personally to me, “We are
going to see that the City revokes or does not renew your
franchise if you do not meet our demands.”

29. On March 23, 1981, the City Council met to con-
sider whether it was in the “best interest” of the City to
allow Yellow Cab the one month extension of its fran-
chise. The Council invited parties to “express their
views.” I urged the Council to grant the extension to
avoid intervening in the labor dispute. The Teamsters
urged denial of the extension because, they contended,
Yellow Cab was bargaining “in bad faith” with the

56

drivers and that to grant a further extension would not
be in the driver’s best interests. A transcript of the City
Council meeting is attached hereto marked Exhibit 15
and incorporated herein by reference (“Transcript”).

30. The Teamster representative recited to the Coun-
cil the purported “modest” demands labor was making on
Yellow Cab and Yellow Cab’s purported intransigence.
Fe reported that the striking workers had voted, with
only one dissent, “to endorse the pesition that the fran-
chise not be extended. He said he hoped that pres-
ent Yellow Cab employees “would be hired by whatever
successor is established” for Yellow Cab. (Transcript,

page 5).

31. The AFL-CIO representative, representing the
“brothers and sisters” of the Teamsters, reminded the
Council that there are 700,000 union members in the
County (Transcript, page 8), claimed that Yellow Cab
was acting in “cad faith,” and urged denial of the fran-
chise. (Transcript, page 9).

32. The President of the Council stated that “it will be
very difficult to get this ordinance passed to extend this
franchise if the labor dispute is not settled by the end of
this week .. and that “both sides should realize that
[if] it is not done by the end of this week, that there is a
very good possibility that there will not be a... fran-
chise for Yellow Cab, it will lapse, it will be open to...
other .. companies.” (Transcript, page 21).

33. Thereupon, the Council voted to defeat the motion
which recommended that the Council find that it would
be in the best interests of the City to extend the fran-
chise. Yellow Cab was thereby denied even a thirty day
extension of its franchise.

34. At no point in the franchise renewal proceedings
was plaintiff notified that any evidentiary or fact finding
hearing would be held to determine whether the franchise
should be renewed. Plaintiff was never offered an oppor-

57

tunity to present sworn testimony, to offer admissible evi-
dence, or to cross-cxamine opposing parties under oath.
The only factual findings adduced were that plaintiff was
in full compliance with all the terms of its franchise.

35. The refusai of the City to grant plaintiff a four-
year franchise when five other operators obtained such
franchises under similar circumstances was arbitrary
and capricious, and was based solely upon political con-
sideration of the financial resources and voting power of
the City’s large union population. Several members of
the City Council are persently engaged in reelection cam-
paigns for an election to be held in less than one month.
One of the council members is running for the office of
City Attorney in the same election. The City’s mayor is
also running for reelection in that election.

36. I feel as if the City Council has “put a gun to my
head” in threatening franchise expiration unless plaintiff
accedes to the Teamster demands. The city has severely
damaged if not destroyed my ability to bargain with the
union.

37. Unless this Court grants the temporary restrain-
ing order as requested, Yellow Cab’s franchise will lapse
March 31, 1981. Loss of the franchise will cause irre-
parable injury to Yellow Cab. Yellow Cab will be com-
pletely forced out of business with major or total loss of
investment.

I declare under penalty or perjury that the foregoing
is true and correct and that this declaration was executed
on the 30th day of March, 1981 at Los Angeles, CA.

/s/ Eugene Maday
EUGENE MADAY

58
EXHIBIT 13
JOINT COUNCIL OF TEAMSTERS NO. 42

{Letterhead |
February 5, 1981

Mayor Tom Bradley
City Hall
Los Angeles, CA 90012

Dear Mayor Bradley:

Enclosed for your information is a copy of a letter to
John Ferraro. The same letter has been sent to all mem-
bers of the City Council.

We appreciate your continuing interest in this matter.

Sincerely,

Hugo Morris, Director of Public Affairs
JOINT COUNCIL OF TEAMSTERS No. 42

HM:bv

ec: Eugene Maday
Alan Friedman
Jerry Cremins
Robert Chick
Donald Howery
Fran Savitch
Julie Sgarzi
Bill Robertson

59
EXHIBIT 14

JOINT COUNCIL &OF TEAMSTERS NO. 42

[Letterhead]
February 5, 1981

Hon. John Ferraro
Councilman, 4th District
City Hall

Los Angeles, Calif. 90012

Dear John:

This letter is to inform you of the current status of the
Yellow Cab negotiations.

In December, agreement was reached on a , ‘short-term
contract ending at midnight on February 10, 1981.

We have been meeting with the company this week and
are scheduled to continue negotiations over the weekend.
Membership meetings have been set for Monday the 9th
to approve or disapprove whatever proposal results from
the discussions. If it is not possible to achieve an ac-
ceptable settlement, there will be a strike on Wednes-
day, February 11th. We will make every effort to arrive
at a settlement that will prevent this from happening.

The company and the union are very conscious of the
fact that on February 11th the Council is expecting to
consider two matters that have great impact upon the
negotiations:

1. The franchise ordinance which includes the re-
quirement of employer-employee statis for all
drivers.

2. The rate increase for Yellow Cab.

The union strongly supports both recommendations as
necessary to the establishment of a viable company op-

60
eration with reasonable working conditions for the
drivers.

If you have any questions or concerns that you would
like to discuss prior to the Council meeting on Wednes-
day, please call my office so that arrangements can be
made for a meeting with you or a member of your staff.

Sincerely,

Hugo Morris, Director of Public Affairs
JOINT COUNCIL OF TEAMSTERS No. 42

HM: bv

61
FXHIBIT 15
TRANSCRIPT OF CITY COUNCIL PROCEEDINGS

BY MR. FERRARO:

That is approved and we have a forthwith to the
Mayor there is no objections that will be the order. Next
item. Mr. President number 14 was called the Motion
of Valdez by Mrs. Russell relates to number 14. Mrs.
Russell we do have one card to be heard.

BY MS. RUSSELL:

Mr. President, members of Council, item number 14,
as you can see on the calendar has to do with the ex-
tension of the Yellow Cab Franchise and is something
that we have looked at in Council for a while.

I'd like to check on your Motions and look at the Mo-

2

sf
5
F

you the situation where we are whereas the taxicab fran-
chise granted to Golden State Transit Corporation, tha
is, Yellow Cab Company to operate upon certain streets
in the city of Los Angeles is presently due to expire
March 31, 1981 and whereas the city council previously
extended such franchise at April 30, provided it was

i
3
8
1
—
4
Ss
5
2
5
5
oe

that’s the situation we have before us now. The Motion
goes on to say whereas there are pres ntly uncertainties
relating to such franchise which will require investiga-
tion by the Department of Transportation ard we do
need to get a report from the Department I will speak
to that later,

62

Now, the last two paragraphs we need to look at and
they are what I think we will hear about in the public
hearing whereas it would not be in the best interests of
thet City to allow for such franchise to expire March 31,
1981, therefore, it is hereby found and determined that
it is in the best interests of the City to allow for such
extension to April 30, 1981. This is the question mem-
bers of council that you will be deciding today and I
think you will want to listen for in the public hearing
as I will move for in the public hearing.

BY MR. FERRARO:

Alright, there are no objections to the Public hearing,
but before we have the public hearing, Mrs. Russell,
could we have the staff come to the center table and if
they want to add anything before the public hearing?
Or do you want to wait until after?

Alright. If you could come to the center table. Alright
the, Mrs. Russell, how do you want those, those in favor
or those opposed, or just one of each? Alright. Mr.
Maday, Eugene Maday is in favor, take the center micro-
phone, Mr. Maday, and .. . alright, members of the Coun-
cil, could we have your attention please. Go ahead, Mr.
Maday.

BY EUGENE MADAY:

Ladies and gentlement, my name is Gene Maday, I
would like to speak on the impending proposal. I don’t
think there should be a public hearing, I think my fran-
chise should be granted to me the same as it has been
granted to the other companies for approximately a five
year period. We are in the middle of the labor dispute.
The teamsters are using this as nothing but a ploy and
using you people to try to settle their labor disputes. I
do not think that this is proper, I do not think that the
City should be involved in the labor disputes, I do not
think that the Teamsters should call upon the City to do

their dirty work. There have been an awful lot of lies,
innuendos, statements taken out of context which the
Teamsters have used against me and they are trying to
use these things to influence you people to do their bid-
ding and to put Yellow Cab out of business like they
did then last time and trying to take control of the com-
pany for their own personal gain. Thank you.

BY MR. FERRARO:
Alright, Mr. Hugo Morris.

BY HUGO MORRIS:

I’m Hugo Morris, representing the Joint Council of
Teamsters #42 and Local 572 of the Teamsters which
represents the cab drivers at Yellow Cab. Four years
ago we urged the Council to approve the franchise trans-
fer to Yellow Cab to protect the jobs of the drivers that
were put out of work because of the bankruptcy of Yel-
low Cab, notas Mr. Maday just stated where Yellow
Cab, he alleged, was put out of business by the Team-
sters. Now to our great regret we are asking that Yel-
low Cab franchise n

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_1045%3A0. Public record. Not legal advice.