Petition for Writ of Certiorari — City of San Antonio v. Stucky, Dba Bill's Wrecker Service

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; Supreme

(\\ FILED

No o1. 911028 DEC 13 2001

OFFICE OF THE CLennK

IN THE

Supreme Court of the United States

CITY OF SAN ANTONIO and TEXAS

TOWING CORPORATION,

Petitioners,

BRENDA L. STUCKY, d/b/a Bill’s Wrecker Service,

and RICHARD VILLANEVA, d/b/a Creswell’s

24 Hour Wrecker Service,

Respondents.

On PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CGURT OF APPEALS FOR THE FIFTH CIRCUIT

PETITION *OR A WRIT OF CERTIORARI

JACQUELINE M. STROH ALAN WRIGHT

Counsel of Record Desra J. McComas

Crorts & CALLAWAY Haynes & Boone, L.L.P.

A PROFESSIONAL CORPORATION 901 Main Street

112 East Pecan Street Suite 3100

Suite 800 Dallas, Texas 75202

San Antonio, Texas 78205 _ (214) 651-5000

(210) 299-0289 Attorneys for Petitioner

DEBORAH LYNNE KLEIN Texas Towing Corporation

Office of the City Attorney

Assistant City Attorney IV

P.O. Box 839966

San Antonio Texas 78283

(210) 207-8950

Attorneys for Petitioner

City of San Antonio

171114 g Xx

COUNSEL PRESS A \ \

(800) 274-3321 + (800) 359-6859 \

Sea

QUESTIONS PRESENTED

Whether the contract for towing services between the

City of San Antonio and Texas Towing, and relevant

ordinances and code provisions, if deemed subject to any

preemptive effect of the Federal Aviation Administration

Authorization Act, 49 U.S.C. § 14501(c)(1), fall within the

public safety exception under that Act and whether the public

safety exception contained in (c)(2)(A) has been properly

interpreted to exclude a State’s right to delegate public safety

authority to municipalities.

Whether the contract for towing services between the

City of San Antonio and Texas Towing and relevant

ordinances and code provisions are proprietary in nature and

therefore not subject to preemption by the Federal Aviation

Administration Authorization Act, 49 U.S.C. § 14501(c)(1)

under the theory set forth in Building & Constr. Trades

Council v. Associated Builders & Contractors of Massachusetts/

Rhode Island, Inc., 507 U.S. 218 (1993).

LIST OF PARTIES

1. City of San Antonio Defendant/Counter-

Plaintiff/Petitioner

2. Texas Towing Corporation Intervenor/Counter-

Plaintiff/Petitioner

3. Brenda L. Stucky, d/b/a Plaintiff/Counter-

Bill’s Wrecker Service Defendant/Respondent

4. Richard Villaneva, d/b/a Plaintiff/Counter-

Creswell’s 24 Hour Defendant/Respondent

Wrecker Service |

STATEMENT PURSUANT TO RULE 29.6

Petitioner, Texas Towing Corporation, is wholly owned

by Miller Industries Incorporated, which is publicly traded.

ili

TABLE OF CONTENTS

Page

Questions Presented ......................... 1

I ds 6d oy sya dbo Whe ve endcs Sivek li

Statement Pursuant to Rule 29.6 ............... 1]

MT ig wos soo es cs 6 0c awleeccn ill

Table of Cited Authorities ..................... vl

fee Xi

ES ashe a an er : 1

Statement of Jurisdiction ..................... l

Statutes and Regulations Involved .............. l

Statement of the Case ........................ 3

A. Statement of Facts ..................... 3

B. Proceedings Below .................... 5

Reasons for Granting the Writ ................. 7

Eh 10

A. Preemption Should Not Be Found by

eae y baw sk so bv ecco ase oowcs 10

Contents

B. The City of San Antonio’s Single-Vendor

Towing System Falls Within the Public Safety

Exemption of Section 14501(c)(2)(A) .....

States Retain Authority to Regulate in

the Area of Safety, Which Includes the

Authority to Delegate Regulatory Duties

BE PP PT ee ee

Recognizing the Authority Congress Left

to the States Neither Increases Nor

Decreases the Potential for Municipal-

Specific Safety Regulation ..........

Mortier Is Controlling, or At Least

Informative, on the Extent to Which a

State’s Authority to Regulate Is

PUI cu cae oaeacedweus ee eaees

C. The City of San Antonio Has Acted in Its

Proprietary Capacity in Opting for a Single-

Vendor Towing System .................

The Fifth Circuit First Addressed the

Issue and Has Done So Inconsistently

The Circuit Courts Have Distinguished

Between Consensual Versus Noncon-

sensual Tows in Markedly Different

Sr ype es atywery Che am tel

Page

Contents

Page

3. The Only Relevant Question Under

Boston Harbor |\s Whether the City Is

Acting as a Market Participant ....... 26

En te oe ee es aaa a ee oak 29

TABLE OF CITED AUTHORITIES

Page

Cases:

Ace Auto Body & Towing, Ltd. v. City of New York,

171 F.3d 765 (2d Cir.), cert. denied, 528 U.S. 868

fh) Pape PEN ry Ae es 13, 14, 18, 19, 20

AJ's Wrecker Serv., Inc. v. City of Dallas, 1998 WL

185521 (N.D. Tex., Apr. 15, 1998) ........... 15

Andrada v. City of San Antonio, 555 S.W.2d 488

(Tex.Civ.App. — San Antonio 1977, writ dism’d) . . 3

Atkin v. State of Kansas, 191 U.S. 207 (1903) ..... 11

Building & Constr. Trades Council v. Associated

Builders & Contractors of Massachusetts/Rhode

Island, Inc., 507 U.S. 218 (1993) ............

California v. ARC Am. Corp., 490 U.S. 93 (1989) ... 11

California Dump Truck Owners Ass'n v. Davis, 2001

WL 1504373 (E.D. Calif., Oct. 30,2001) ...... 15, 16

Californians for Safe & Competitive Dump Truck

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

1998), cert. denied, 526 U.S. 1060 (1999) ..... 18

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

Bedford, Tex., 180 F.3d 686 (Sth Cir. 1999) ... passim

vil

Cited Authorities

Page

Chevron, U.S.A., Inc. v. Natural Res. Def. Council,

Boe., 467 U.S. GST (ISS) cco nccncdesccecsess 17

City of Charleston v. Government Employees Ins.

Co., 869 F. Supp. 378 (D.S.C. 1994), opinion

wecated, May 16, 1995 .....cccccccsnecccees 14, 15

City of Cleveland v. Fox, 2001 WL 792701 (Ohio

Ce. App. Fully 12, FOOT) onc cccvcccsceseeves 16

City of College Station v. Turtle Rock Corp., 680

S.W.2d 802 (Tex. 1984) ........ 0... cece ee eee 16

City of Columbus v. Garrett, 2001 WL 289980

(Ohio Ct. App., March 27, 2001) ............. 16

City of Columbus v. Our Garage & Wrecker Service,

257 F.3d 506 (6th Cir. 2001), petition for cert.

filed, _U.S.L.W. __ (U.S. Sept. 7, 2001)

OR GEEEO k cnc vccecrtasccepessens cress: 8

College Sav. Bank v. Florida Prepaid Postsecondary

Educ. Expense Bd., 527 U.S. 666 (1999) ...... 21

Harris County Wrecker Owners vy. City of Houston,

943 F. Supp. 711 (S.D. Tex. 1996) ......... 13, 14, 15

Hott v. City of San Jose, 92 F. Supp. 2d 996

(N.D. Cal. 2000), aff’d, 2001 WL 1458017

(Sth Ciz., Nov. 16, 2001)... ccc cccccveesers 15

vill

Cited Authorities

Page

Interstate Towing Ass'n, Inc. v. City of Cincinnati,

ae Bie ke | ee 12

Johnson v. Fankell, 520 U.S. 911 (1997) ......... 10

Martin y. Stites, 2001 WL 121855 (10th Cir., Feb.

13, 2001), cert. denied, 122 S. Ct. 64(2001) ... 13

Medtronic, Inc. v. Lohr, 518 U.S. 470 (1996) ..... 12

New Orleans Towing Ass'n v. City of New Orleans,

2000 WL 193071 (E.D. La., Feb. 15, 2000) .... 3,15

Northway Towing, Inc. v. City of Pasadena, Texas,

94 F. Supp. 2d 801 (S.D. Tex. 2000) .......... 15

People ex rel. Renne v. Servantes, 86 Cal. App. 4th

1081, 103 Cal. Rptr. 2d 870 (2001), petition for

cert. filed, 70 U.S.L.W. 3162 (U.S. Aug. 14,

ry reer eee rer 8,14

Petrey v. City of Toledo, 246 F.3d 548 (6th Cir.

DE: wa Hawes scan ok bar errr Coe e passim

R. Mayer of Atlanta, Inc. v. City of Atlanta, 158 F.3d

538 (11th Cir. 1998), cert. denied, 526 U.S. 1038

CE boa ko hales ores keane 12, 13, 16, 17, 20, 25

Southern Blasting Servs., Inc. v. Wilkes County,

162 F. Supp. 2d 455 (W.D.N.C. 2001) ......... 16

Cited Authorities

Page

Syldyld, Inc. v. City of San Jose, 2001 WL 1459523

yo Pe ee Ye | rere rer 15

Texas Savings & Cmty. Bankers Ass'n v. Federal

Hous. Fin. Bd., 201 F.3d 551 (Sth Cir. 2000) ... 17

Tocher v. City of Santa Ana, 219 F.3d 1040 (9th Cir.

2000), cert. denied, 531 U.S. 1146 (2001) .... passim

Town of Ascarate v. Villalobos, 148 Tex. 254,

ee a ia sk haha rie ie 16

U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779

86d ee ee LCRA A aS eee ne 10

Whitten v. Vehicle Removal Corp., 56 S.W.3d 293

(Tex. App. — Dallas 2001, pet. filed) .......... 3

Wisconsin Pub. Intervenor v. Mortier, 501 U.S. 597

SOE anaes neh cone teans 9, 13, 14, 19, 20, 21

Statutes:

he SO ee Oe er 14

RE SM) ER ee re ee ee ee eee 14

I I Pa be ished ke awa ees oo es ]

a a a a 5, 6

Cited Authorities

Page

OP Ores ee PEERS C0 0.6 ceeebcrguceerenes 15

ens Ee I Sc hweckieseeesestecey cues I

er eras EE cnr checsdeeeserencrvceceuus 7,18

ep Wen te Ns ho cee snede tess 1, 6, 8, 11, 17, 28

GP U.BA} © HGBIIIDD vo ccccesesuncvvess i, 5, 12, 16

PULA. § MIGSOGEED pp vvcveverciucivesevnss 5

49 U.S.C. § 14501(c)(2)(A) ....:.1, 8, 11, 12, 13, 15, 16

UBC. 6 PGRN 6 kes cc ebctsvcenexes 25

BeprorbD, TEx., Mun. Cope § 126-156 ........... 23

BeprorbD, TEx., Mun. Cope § 126-157 ........... 23

SAN ANTONIO, TEX., Mun. Cope § 19-391 ........ 2, 4, 5

Tex. TRANSP. Cove § 643.201 (Vernon Supp.

BED cb ocedecsinissanvecerieeieereseei 28

Tex. TRANSP. Cope § 643.201(a) (Vernon Supp.

PPC ETE Ee Te Prete 16

Cited Authorities

Page

Other Authorities:

H.R. Conr. Rep. 103-677 (1994), reprinted in 1994

Sa: BEE o 4 esse eunncanese eed cne: 18

H.R. Conr. Rep. No. 104-311 (1995), reprinted in

Se a FE keen neue vebecnccens 18

U.S. Dep’t oF TRANSP., INTRASTATE TRUCKING

IN ol ae odin g bale bos a elke se 17

xii

TABLE OFAPPENDICES

Appendix A — Opinion Of The United States Court

Of Appeals For The Fifth Circuit Dated And Filed

tS as vo S95 ee ake eee

Appendix B — Order Of The United States District

Court For The Western District Of Texas, San

Antonio Division, Dated April 3, 2000 And Filed

Ge k cheney ss hindavks tia

Appendix C — Judgment Of The United States

District Court For The Western District Of Texas,

San Antonio Division, Dated May 3, 2000 And

go re eae Fer rc

Appendix D — Amended Judgment Of The United

States District Court For The Western District Of

Texas, San Antonio Division, Dated May 17, 2000

Ane Pek WE 2d, DOGO sve vcvcccevcesvesses

Appendix E — Per Curiam Opinion Of The United

States Court Of Appeals For The Fifth Circuit

Denying Petition For Rehearing Dated And Filed

ET SO OUR 4.55 500.06 cheer eeeeranes

Appendix F — City Ordinance 31977 ...........

Appendix G — City Wrecker Code, § 19-391

Appendix H — City Ordinance 77716 (With

CE Vic kavune eae eosereneuoeee lla

Page

46a

55a

57a

xii

Appendices

Appendix I — City Ordinance 82744

Appendix J — City Ordinance 87775

Petitioners City of San Antonio and Texas Towing

Corporation respectfully petition for a writ of certiorari to

review the judgment of the United States Court of Appeals

for the Fifth Circuit in this case.

OPINIONS BELOW

The opinion of the court of appeals, dated July 30, 2001,

is reported at 260 F.3d 424 (Sth Cir. 2001). (App. A) The

district court order granting in part the Petitioners’ motions

for summary judgment was filed April 4, 2000, and is reported

at 2000 WL 33348252 (W.D. Tex., Apr. 4, 2000). (App. B)

The district court judgment granting judgment in favor of

the City of Antonio was filed on May 4, 2000. (App. C) The

district court amended judgment granting judgment in favor

of the Petitioners was filed on May 23, 2000. (App. D)

STATEMENT OF JURISDICTION

The judgment sought to be reviewed was entered by the

Fifth Circuit Court of Appeals on July 30, 2001. The opinion

on denial of the petitions for rehearing, dated September 14,

2001, is reported at 266 F.3d 342 (Sth Cir. 2001). (App. E)

The jurisdiction of this Court is invoked under 28 U.S.C.

§ 1254(1).

STATUTES AND REGULATIONS INVOLVED

The Federal Aviation Administration Authorization Act

of 1994 amended the Interstate Commerce Act, 49 U.S.C.

§ 11501(h). The Interstate Commerce Commission

Termination Act, passed in 1995, recodified 49 U.S.C.

§ 11501(h) at 49 U.S.C. § 14501(c). Section 14501(c) reads:

(1) General rule. — Except as provided in

paragraphs (2) and (3), a State, political subdivision

of a State, or political authority of 2 or more States

may not enact or enforce a law, regulation, or other

provision having the force and effect of law related

to a price, route, or service of any motor carrier

(other than a carrier affiliated with a direct air

carrier covered by section 41713(b)(4)) or any

motor private carrier, broker, or freight forwarder

with respect to the transportation of property.

(2) Matters not covered. — Paragraph

(1) —

(A) shall not restrict the safety

regulatory authority of a State with

respect to motor vehicles, the authority

of a State to impose highway route

controls or limitations based on the size

or weight of the motor vehicle or the

hazardous nature of the cargo, or the

authority of a State to regulate motor

carriers with regard to minimum

amounts of financial responsibility

relating to insurance requirements and

self-insurance authorization.

Also relevant are San Antonio City Ordinance No. 31977

(now codified at § 19-391 in the SAN ANTONIO MUNICIPAL

Cope), San Antonio City Ordinance No. 77716, San Antonio

City Ordinance No. 82744, and San Antonio City Ordinance

No. 87775. These provisions are included as part of the

Appendix (App. F-J).

STATEMENT OF THE CASE

A. Statement of Facts

This case arises from the public property towing system

formulated by the City of San Antonio. Prior to 1963, there

existed no City limitation of public property, non-consensual

towing in San Antonio. (R. 822-23) Most wrecker services

vying for tow opportunities monitored police radio

transmissions, only to race to the scene of an accident in the

hopes of obtaining business from the individuals involved,

a process some refer to as “wreck chasing.’ (R. 822-23)

Typically, more than one company would appear at the scene,

leading to a dispute as to which company would provide the

towing services needed. (R. 822-23, 1043) There was no

guarantee that the wrecker who arrived would have with it

the proper equipment to accomplish the tow. In addition, the

race to the scene created public safety dangers, not only

because of the wreckers’ excessive speed, but also due to the

congestion of roadways, which made it difficult or impossible

for emergency medical personnel to timely respond and which

created extra work for those police officers at the scene.

(R. 822-23, 1043)

1. See Whitten v. Vehicle Removal Corp., 56 S.W.3d 293, 299

n.3 (Tex. App. — Dallas 2001, pet. filed); New Orleans Towing Ass'n

v. City of New Orleans, 2000 WL 193071, *1 (E.D. La., Feb. 15,

2000) (“Wreck chasing is a practice by which tow truck operators

race to the scene of an accident in order to offer unsolicited assistance

to disabled vehicles. Tow truck operators often use police radios and

monitor police radio frequencies in order to determine the location

of these accidents”), abrogated by Stucky; Andrada v. City of San

Antonio, 555 S.W.2d 488, 490 (Tex.Civ.App. — San Antonio 1977,

writ dism'd) (recognizing competitive environment and attendant

safety concerns).

On December 12, 1963, the San Antonio City Council

enacted City Ordinance No. 31977, which placed full

authority to direct the towing of vehicles involved in

collisions on City streets in the Chief of Police or his

authorized representative. (R. 423) This ordinance,

extending the same authority to the City’s Director of

Parking, subsequently was codified as City Code § 19-391.

(R. 14) After passage of this ordinance, towing services were

requested on a rotation basis from contracted towing

companies. (R. 830) The rotation system, however, caused

numerous problems due to delays, the unavailability of

wreckers, and improper equipment. (R. 824-25) In 1977, the

City entered into an exclusive contract for the provision of

towing services with City Towing Associates, Inc. (R. 823)

This contract remained in effect, by extensions, until the late

1980’s. At that point, other towing companies initiated suit

in federal court alleging violations of the Sherman Antitrust

Act. In response, the City amended its contract with City

Towing to create a prime contractor/subcontractor rotation

system. (R. 830)

In 1993, the City issued a request for bid proposals for a

new prime contract, which would last for an initial one-year

term followed by an automatic four-year renewal option upon

satisfactory performance during the initial period. (R. 432-

39, 442-43, 475) Four bids were submitted, one of which

was a joint bid by four separate companies. City staff

reviewed the bids for recommendation to the City Council,

and, during a regular meeting, the Council voted to grant the

contract to Texas Towing Company through City Ordinance

77716. (R. 19)

In 1995, Texas Towing requested an amendment to its

towing services contract, which would grant the City an

option to extend the contract for an additional five-year

period; to allow Texas Towing to obtain additional financing

and to justify an additional investment in equipment. (R. 887;

X 43F) The Council amended the contract accordingly, and,

on May 7, 1998, voted to exercise the option through

Ordinance 87775. (R. 889; X 43F, G, and H) During this

time, Congress enacted the Federal Aviation Administration

Authorization Act and then the Interstate Commerce

Commission Act for the purpose of deregulating the motor

Carrier industry.

B. Proceedings Below

On December 4, 1996, Brenda L. Stucky d/b/a Bill’s

Wrecker Service and Richard Villaneva d/b/a Creswell’s

24 Hour Wrecker Service filed a complaint against the City

of San Antonio. (R. 1-8) The complaint alleged that section

19-391 of the City Code, as well as Ordinance 77716 and

any other laws, regulations, or ordinance concerning price,

route, or service of a motor carrier, are preempted by the

Federal Aviation Administration Authorization Act, 49 U.S.C.

§ 14501(c)(1) and (2) (“FAAAA”). (R. 1-8) They also alleged

a violation of their civil rights pursuant to 42 U.S.C. § 1983,

claiming that the regulations deprived them of property and

liberty interests, and alleged a violation of the Sherman

Antitrust Act. (R. 1-8, 131-32, 188, 194) The complaint

sought injunctive and monetary relief. (R. 1-8)

The City answered the complaint on January 28, 1997,

and Texas Towing Corporation intervened shortly thereafter.

(R. 62-67, 68-130, 133) Less than a year after filing their

complaint, Stucky and Villaneva filed a motion for partial

summary judgment, seeking a determination and declaration

from the district court of the FAAAA’s preemptive effect on

the City’s code provision and ordinance relating to towing.

(R. 245-357) The City and Texas Towing filed responses,

and, on January 20, 1998, the district court issued an order

granting the plaintiffs’ motion for partial summary judgment

and enjoining the City from further enforcement of those

provisions. (R. 363-423, 434-97, 537-58) Upon various

reconsideration requests, the district court ultimately

withdrew its order and invited additional summary judgment

filings. (R. 559-607, 608-15, 647, 744-53, 871-85, 760-81,

782-89) The parties followed with a new round of motions

for summary judgment, and, on August 25, 1998, the district

court issued an order granting in part and denying in part the

various motions. (R. 796-807, 811-36, 886-903, 918-38)

In essence, the district court dismissed plaintiffs’ section

1983 and antitrust claims with prejudice. The district court

found that the City’s contract system for towing was not

preempted by 49 U.S.C. § 14501(c), but that City Ordinance

82744, amending the contract to provide an option to extend,

and City Ordinance 87775, exercising that option, were

preempted by the FAAAA. The district court further found

that the extension of the contract, without open bid, went

against Congress’ intent to foster a free market. The district

court issued a permanent injunction against the enforcement

of these ordinances. A judgment was entered as to certain

issues, upon joint motion by the parties, and the City and

Texas Towing pursued an appeal to the United States Court

of Appeals for the Fifth Circuit. (R. 981-91, 994, 996-97, 998,

1001-02) On December 14, 2000, the Fifth Circuit issued an

opinion remanding the case to the district court on procedural

grounds and instructing the district court to consider the

Fifth Circuit’s recent opinion in Cardinal Towing & Auto

Repair, Inc. v. City of Bedford, 180 F.3d 686 (Sth Cir. 1999).

(R 1014-17) (Copies of these prior decisions are submitted

herewith as a Lodging.)

Upon remand, the parties reurged their respective

motions for summary judgment to the district court. On April

3, 2000, the district court granted summary judgment in favor

of the City and Texas Towing, finding that the City acted in

a proprietary capacity in entering into its towing contract

and foreclosing plaintiffs’ claims that the City’s single-vendor

system was preempted by 49 U.S.C. § 14501. (R. 1114-20)

The plaintiffs timely filed their notice of appeal on June 1,

2000. (R. 1134-35) The Fifth Circuit again reversed and

remanded, holding that the City was not acting in a

proprietary capacity in contracting with Texas Towing with

respect to consent tows and holding that the safety exemption

of section 14501 did not encompass action taken by

municipalities. Stucky v. City of San Antonio, 260 F.3d 424

(Sth Cir. 2001). The Fifth Circuit rejected application of the

safety exemption to municipalities, even where the authority

for city action had been delegated by a State, which is

unquestionably covered by the Act’s safety exemption.

Petitions for panel and en banc rehearing were filed, which

were denied by the Fifth Circuit with written opinion. Stucky

v. City of San Antonio, 266 F.3d 342 (Sth Cir. 2001).

Petitioners, City of San Antonio and Texas Towing Corporation,

have timely pursued this petition for a writ of certiorari.

REASONS FOR GRANTING THE WRIT

This Court is faced with competing state and federal

interests, played out in competing state and federal court

decisions, on an issue that affects every municipality across

the country entrusted by their respective States with authority

over towing services. Presented with what it described as a

close question, the Fifth Circuit interpreted federal law to

prohibit municipalities from contracting with a single vendor

for the provision of what the Fifth Circuit defined as consent-

tow services. In so doing, it has denied the State of Texas

the authority expressly granted to it by federal law, barring |

the State from delegating its regulatory duties to |

municipalities — duties that would otherwise escape federal |

preemption. It has also denied the City of San Antonio the ;

ability to act in its proprietary function and secure the services |

necessary to accomplish its duties.

Other federal circuit and state courts have addressed

similar questions regarding the preemptive effect of section

14501(c), and there is a pronounced difference of opinion.

In fact, two of those decisions are currently pending before

this Court: one addressing the municipality as proprietor

exemption to preemption, City of Columbus v. Our Garage

& Wrecker Service, 257 F.3d 506 (6th Cir. 2001), petition

for cert. filed, _US.L.W.__ (U.S. Sept. 7, 2001) (No. 01-

419), which has been redistributed for conference on January

4, 2002; and the other addressing the safety exemption of

subsection (c)(2)(A) as applied to municipalities and in which

this Court has requested a response and also redistributed

for a conference on January 4, 2002, People ex rel. Renne v.

Servantes, 86 Cal. App. 4th 1081, 103 Cal. Rptr. 2d 870

(2001), petition for cert. filed, 70 U.S.L.W. 3162 (U.S. Aug.

14, 2001) (No. 01-336).

The Sixth, Ninth, and Eleventh Circuits, which the Fifth

Circuit followed, have all held that the public safety

exemption is not available to municipalities, even where

those municipalities are exercising their safety authority by _

virtue of a delegation from the State — an entity expressly

acknowledged by all to be covered by the safety exemption

of section 14501(c). The Second Circuit, acknowledging the

intrusion into State authority such an interpretation would

bring, has held that the public safety exemption applies to

municipalities who derive their authority over towing

operations from the State. Given the federal-state tension

apparent in this question, it is all the more important that a

state court, namely the Supreme Court of California, has held

that the statute does not prohibit municipal action related to

public safety in the context of towing. The Fifth Circuit’s

decision, made in the midst of this conflict, has effectively

prohibited the City of San Antonio, and all other

municipalities within its jurisdiction, from protecting citizens

on public roads by discouraging the race of tow truck

companies to the scene of an accident, a task delegated to

the City of San Antonio by the State of Texas.

The lower federal courts also conflict, both with each

other and with this Court’s precedent, on whether the

municipal proprietor exception applies to save ordinances

such as the ones at issue here from the FAAAA’s preemptive

reach. For example, the Fifth Circuit in Stucky focused

erroneously on whether the municipality supplants the

consumer, i.e., whether the tow is one in which the vehicle

owner cannot consent, rather than whether the municipality

is itself acting as a market participant, regardless of the

owner’s ability to request tow services and designate a

specific provider. That tack is directly contrary to this Court’s

analysis in Boston Harbor and also conflicts with the circuit’s

earlier treatment of the issue in Cardinal Towing. And while

other circuits have also focused on the consent/nonconsent

dichotomy, they differ vastly in their definitions of “consent”

and “nonconsent” tows, bringing the distinction into further

question and revealing the Fifth Circuit’s analytical flaw in

relying exclusively on it. “Given the importance of the

issue[s] and the conflict of authority,” this Court should grant

certiorari. See Wisconsin Pub. Intervenor v. Mortier, 501 U.S.

597, 604 (1991). ;

aaa Ni ei a i

ARGUMENT

A. Preemption Should Not Be Found by Default

Anytime a court, particularly a federal one, determines

whether a federal law supersedes and overrides state or local

regulation on the subject pursuant to the Supremacy Clause

of the United States Constitution, especially when the law

addresses a subject traditionally within the police power of

states or municipalities, that court must also consider the

dual sovereignty put in place by that same Constitution.

Federalism was our Nation’s own discovery. The

Framers split the atom of sovereignty. It was the

genius of their idea that our citizens would have

two political capacities, one state and one federal,

each protected from incursion by the other. The

resulting Constitution created a legal system

unprecedented in form and design, establishing

two orders of government, each with its own direct

relationship, its own privity, its own set of mutual

rights and obligations to the people who sustain

it and are governed by it.

U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 838 (1995)

(Kennedy, J., concurring). “When pre-emption of state law

is at issue, we must respect the ‘principles [that] are

fundamental to a system of federalism in which the state

courts share responsibility for the application and

enforcement of federal law.’ ” Johnson v. Fankell, 520 U.S. -

911, 922 (1997). Given this tension between the Supremacy

Clause, from which the preemption doctrine derives, and the

federalist structure of the United States Constitution as a

whole, courts have been reluctant to find federal preemption

unless Congress’ intent is unmistakable.

For example, both the Fifth Circuit, in an earlier decision

addressing the preemptive effect of section 14501(c), and

this Court have recognized that “when preemption is invoked

to prevent a state or municipality from wielding its traditional

police powers [such as setting the terms and conditions

governing municipal contracts], congressional intent to

displace that authority must be ‘clear and manifest.’ ”

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

180 F.3d 686, 690 (Sth Cir. 1999), citing California v. ARC

Am. Corp., 490 U.S. 93 (1989) and Atkin v. State of Kansas,

191 US. 207 (1903). The Fifth Circuit in this case, however,

failed to give appropriate deference to local authority and

held that federal law preempted municipal ordinances, though

the court stated no less than twice that the question before it

was close, characterized the legislative history as “ambiguous,”

and acknowledged precedent from this Court casting doubt

on its interpretation of the “plain” statutory language. Stucky,

260 F.3d at 430, 440, 443, 444-45. Such a departure from

traditional preemption analysis cannot stand, particularly

when it is in stark contrast to the analysis conducted by other

federal circuit, federal district, and state courts on the very

federal provision at issue here.

B. The City of San Antonio’s Single-Vendor Towing

System Falls Within the Public Safety Exemption of

Section 14501(c)(2)(A)

Section 14501(c)(2)(A) mandates that the FAAAA “shall

not restrict the safety regulatory authority of a State with

respect to motor vehicles.” (emphais added) Public safety

has long been considered a province of the state, creating a

presumption against federal preemption in that field.

See Medtronic, Inc. v. Lohr, 518 U.S. 470, 475 (1996).?

However, the federal circuit courts, as well as federal and

State courts, have split on the issue of whether section

14501(c)(2)(A) applies to municipalities, even where those

municipalities are acting pursuant to authority delegated to

them by the State.

1. States Retain Authority to Regulate in the Area

of Safety, Which Includes the Authority to

Delegate Regulatory Duties to Municipalities

The Eleventh Circuit was the first to address the

applicability of section 14501(c)(1) to municipal towing

ordinances since the passage of the ICC Termination Act of

1996, and did so in R. Mayer of Atlanta, Inc. v. City of Atlanta,

158 F.3d 538, 544 (11th Cir. 1998), cert. denied, 526 U.S.

1038 (1999). In Mayer, several towing companies in the

Atlanta area challenged the City of Atlanta’s consensual

towing system that governed towing within Atlanta’s city

limits. The Eleventh Circuit held that the ordinances were

preempted and found that the Act’s public safety exemption

extended only to States, not their political subdivisions. The

Sixth and Ninth Circuits followed and held similarly. Petrey

v. City of Toledo, 246 F.3d 548, 560-61 (6th Cir. 2001); Tocher

v. City of Santa Ana, 219 F.3d 1040, 1050-51 (9th Cir. 2000),

cert. denied, 531 U.S. 1146 (2001). The Fifth Circuit in Stucky

joined this jurisprudential majority. Stucky, 260 F.3d at 446.

2. For this reason, “municipal regulation of the business of ~

towing is not unusual.” Jnterstate Towing Ass'n, Inc. v. City of

Cincinnati, 6 F.3d 1154, 1165 (6th Cir. 1993). There is ample support

in the record, as recognized by the Fifth Circuit, that safety motivated

the ordinances and code provision in question. (R. 375-77, 423, 476-

77, 823(16-19), 824-25(30-36), 1040-44; X 43C-1)

The problem with these Circuits’ reasoning is their

requirement that safety authority be conferred directly upon

municipalities by virtue of section 14501(c)(2)(A) in order

for the safety exemption to apply to any municipal ordinance.

Petrey, 246 F.3d at 561-62; Tocher, 219 F.3d at 1050 (“section

14501(c)(2)(A) only exempts safety regulations promulgated

by state governments, not those enacted by municipalities”);

Mayer, 158 F.3d at 545-46. The Second Circuit explained

how this analysis misses the mark:

[W]e see no reason to construe this language to

prevent the state from delegating its regulatory

authority to a municipality. To the contrary, the

legislative history indicates that state safety

regulatory authority (including, presumably, the

authority to delegate) was to be ‘unaffected’ by

the preemption statute.

Ace Auto Body & Towing, Ltd. v. City of New York, 171 F.3d

765, 775 (2d Cir.) (emphasis in original), cert. denied, 528

U.S. 868 (1999). In fact, this Court has recognized that States

have traditionally re-delegated regulatory powers to

municipalities. Wisconsin Pub. Intervenor v. Mortier, 501

U.S. 597, 607-09 (1991), cited in Harris County Wrecker

Owners v. City of Houston, 943 F. Supp. 711, 726-27 (S.D.

Tex. 1996), abrogated by Stucky; see also Martin v. Stites,

2001 WL 121855, *10 (10th Cir., Feb. 13, 2001) (unpublished)

(Briscoe, C.J., concurring and dissenting) (recognizing the

conflict and the need for resolution), cert. denied, 122 S. Ct.

64 (2001).

Joining the Second Circuit is a California state court,

which has held that the City of San Francisco’s ordinances,

enacted pursuant to authority delegated by the State of

California, escape preemption when they come within the

FAAAA’s safety exemption. People ex rel. Renne v.

Servantes, 86 Cal. App. 4th 1081, 1092-94, 103 Cal. Rptr.

2d 870 (2001), petition for cert. filed, 70 U.S.L.W. 3162 (U.S.

Aug. 14, 2001) (No. 01-336). Though the Servantes court

addressed only towing from private property, and not

San Francisco’s statutory scheme regulating the removal of

vehicles from streets and highways by police officers, its

holding rested on the preemptive reach of the Act. Servantes,

86 Cal. App. 4th at 1084 n.2, 1092-94. The Servantes court

explained that the Zocher concern regarding the potentially

expansive practice of state delegation to municipalities was

“overstated.” Jd. at 1094 (“Had Congress intended not to

except municipal safety regulations, Congress could have said

so”). The Servantes court also followed the lead of Ace Auto,

finding in the legislative history “no expression of a

congressional desire to preempt local control over safety

issues.” Jd.

Still other courts, before the Fifth Circuit’s decision in

Stucky, had concluded that use of the word “State” in the

safety exemption “does not mean that this subsection of the

status does not also allow municipal regulation.” Harris

County Wrecker Owners v. City of Houston, 943 F. Supp.

711, 726 (S.D. Tex. 1996), abrogated by Stucky, citing

Mortier, 501 U.S. at 607-09, 611-12. The Harris County court

recognized the ability of states to delegate authority to local

government and noted that nothing in either the statute’s text

or its legislative history precluded such a reading. Jd. at 726- |

27; see also City of Charleston v. Government Employees

Ins. Co., 869 F. Supp. 378, 386 (D.S.C. 1994) (holding that

nothing in the history of the McCarran-Ferguson Act, 15

U.S.C. §§ 1011, 1012, which removed all Commerce Clause

limitations on “a State” to regulate and tax the business of

insurance, or its overall structure, is inconsistent with

allowing states to delegate taxing authority to municipalities),

opinion vacated, May 18, 1995.

The Harris County court also noted that subsection

(c)(2)(A) allows “a State to impose highway route controls

or limitations based on. . . the hazardous nature of the cargo,”

which is a reference to the Hazardous Materials Transportation

Authorization Act of 1994, 49 U.S.C. §§ 5101-5127. Harris

County, 943 F. Supp. at 727. The HMTA Act makes clear

that municipal authority over the routing of hazardous

materials shipments by motor carriers is allowed, as long as

it complies with the Act’s standards. Jd. As a result, because

delegation is allowed in this instance, there is nothing to

suggest that it is not allowed with respect to the safety

exemption as well. See also AJ's Wrecker Serv., Inc. v. City

of Dallas, 1998 WL 185521, *3 (N.D. Tex., Apr. 15, 1998)

(“Section 14501(c)(2)(A) . . . preserves the City’s authority

to regulate motor vehicle safety”), abrogated by Stucky; Hott

v. City of San Jose, 92 F. Supp. 2d 996 (N.D. Cal. 2000)

(holding that federal law “does not preempt local regulations

that concern safety when such regulations are authorized by

state statute”), aff'd, 2001 WL 1458017 (9th Cir., Nov. 16,

2001) (unpublished); New Orleans Towing Ass'n, Inc. v. City

of New Orleans, 2000 WL 193071, *9 (E.D. La., Feb. 15,

2000) (“although Congress did not expressly extend the

protection of the safety exception to municipalities, this does

not preclude a state from delegating its regulatory authority

to the city”), abrogated by Stucky; Northway Towing, Inc. v.

City of Pasadena, Texas, 94 F. Supp. 2d 801, 802 (S.D. Tex.

2000) (citing Harris County), abrogated by Stucky.’

3. See also Syldyld, Inc. v. City of San Jose, 2001 WL 1459523

(9th Cir., Nov. 16, 2001) (unpublished) (following Tocher); California

(Cont’d)

Absent any showing of intent on the part of Congress to

override a State’s interest in delegating this authority, a State

must be allowed, per the statute’s express terms, to legislate

as it sees fit. But see Tocher, 219 F.3d at 1051 (“for section

14501(c)(2)(A) preemption purposes, a state may not delegate

its regulatory authority to a municipality”). The State of Texas

has expressed its intention to delegate its authority over tow

truck operations to municipalities by stating that “a

municipality may regulate the operation of a tow truck to

the extent allowed by federal law.” TEx. TRANsp. CoDE

§ 643.201(a) (Vernon Supp. 2002). This delegation of

authority by a State to municipalities to allow those

municipalities to operate as arms of the State has been

recognized by Texas’ High Court. City of College Station v.

Turtle Rock Corp., 680 S.W.2d 802, 805 (Tex. 1984); Town

of Ascarate v. Villalobos, 148 Tex. 254, 223 S.W.2d 945,

950 (1949).

The Fifth Circuit’s reading is also inconsistent with the

Department of Transportation’s interpretation of the

provision. The Department has read subsection (c)(2)(A) as

exempting both state and local safety regulations from

(Cont’d) :

Dump Truck Owners Ass’n v. Davis, 2001 WL 1504373, *5 (E.D.

Calif., Oct. 30, 2001) (“the safety regulation exception . .. does not

extend to California Code provisions which authorize local

ordinances”); Southern Blasting Servs., Inc. v. Wilkes County, 162

F. Supp. 2d 455, 464-65 (W.D.N.C. 2001) (explaining that section

(c)(2)(A) does not exempt political subdivisions of the state from -

the preemptory language of § 14501(c)(1)); City of Cleveland v. Fox,

2001 WL 792701, *3 (Ohio Ct. App., July 12, 2001) (unpublished)

(following Petrey, but recognizing conflict); City of Columbus v.

Garrett, 2001 WL 289980, **4-5 (Ohio Ct. App., March 27, 2001)

(unpublished) (following Mayer, but recognizing conflict).

preemption. U.S. Dep’T oF TRANSP., INTRASTATE TRUCKING

DEREGULATION; see also Chevron, U.S.A., Inc. v. Natural Res.

Def. Council, Inc., 467 U.S. 837, 842-43 (1984) (holding

that in reviewing agency’s construction of statute, when text

of statute is ambiguous, court must not substitute its own

interpretation for reasonable interpretation by agency charged

with statute’s administration); Texas Savings & Cmty.

Bankers Ass’n v. Federal Hous. Fin. Bd., 201 F.3d 551, 554

(Sth Cir. 2000) (same).

2. Recognizing the Authority Congress Left to the

States Neither Increases Nor Decreases the Potential

for Municipal-Specific Safety Regulation

The majority of circuits have also rested their determination

that the safety exemption does not apply to municipal

ordinances on the theory that to rule otherwise would leave

in place or allow for a tangled web of regulation and that to

leave this authority to the States alone would prevent such a

patchwork. Stucky, 260 F.3d at 431; Petrey, 246 F.3d at 563;

Tocher, 219 F.3d at 1051; Mayer, 158 F.3d at 546. However,

none of these decisions explains why this would not result

from direct State regulation alone. There is nothing in section

14501(c) that prohibits States from enacting tow truck

regulation on a city-by-city basis, and there has been no hint

from the federal circuit courts that the State’s regulatory

approach somehow informs whether the safety exemption

would be held to apply. In fact, the State of Texas has

addressed the issue on an individual basis by delegating its

tow truck oversight to the various municipalities within its

borders. Moreover, the legislative history on which Stucky

and other courts have relied indicates that the crux of

Congress’ concern was the effect of multiple regulations on

interstate commerce by national and regional carriers, not

the effect of localized practices in the context of pure intra-

municipal towing. H.R. Conr. Rep. 103-677, at 87 (1994),

reprinted in 1994 U.S.C.C.A.N. 1715, 1759; see also H.R.

Conr. Rep. No. 104-311, at 82 (1995), reprinted in 1995

U.S.C.C.A.N. 797:

[s]ince motor carrier transport is a truly interstate

industry, it is critical to the smooth functioning

of commerce that there be federal commercial

rules established to ensure that all interstate

transportation is subject to the same rules and

procedures. Otherwise, a motor carrier would be

potentially subject to 50 different rules for

operation

(emphasis added).

As the Second Circuit in Ace Auto explained, the

legislative history made clear that a state’s safety regulatory

authority, including the authority to delegate, was to be

“unaffected” by the preemption statute. Ace Auto, 171 F.3d

at 775, quoting H.R. Conr. Rep. No. 103-677, at 84, 85,

reprinted in 1994 U.S.C.C.A.N. at 1756, 1757. The Ace Auto

court continued that while Congress had a deregulatory

purpose.in mind, the scope of that purpose is unclear and

suggests that the key was to eliminate local economic

regulation, not local safety regulation. Ace Auto, 171 F.3d at

775; see also Californians for Safe & Competitive Dump

Truck Transp. v. Mendonca, 152 F.3d 1184, 1187 (9th Cir.

1998) (explaining FAAAA’s purposes as across-the-board

deregulation and leveling the playing field between air and

motor carriers), cert. denied, 526 U.S. 1060 (1999). As a

result, this Court should “hesitate to construe the text of

§ 14501 so as to frustrate unnecessarily the ability of

municipalities to respond to the local safety concerns created

by local towing industries.” Ace Auto, 171 F.3d at 775.

Such an approach makes sense. Practically, regulation

of public safety concerns as they relate to towing from public

streets and ways must be addressed by individual

municipalities. The relevant considerations depend on factors

unique to each municipality, such as population, city layout,

and traffic patterns. The public safety concerns of a small

city are, by necessity, different from those faced by the City

of San Antonio, one of the most populated cities in the

country. To expect the State of Texas to be able to create a

public safety scheme to be applied across the board is

unrealistic, as is the expectation that the State could create

efficient safety regulations for each city individually. Absent

evidence of express Congressional intent to preclude it,

public policy dictates that municipalities be allowed to

determine what safety concerns each faces and the best

method for addressing them when that authority is conferred

by the State.

3. Mortier Is Controlling, or At Least Informative,

on the Extent to Which a State’s Authority to

Regulate Is Preserved

Finally, the courts conflict in their interpretation of this

Court’s decision in Wisconsin Public Intervenor v. Mortier,

501 U.S. 597 (1991). In Mortier, this Court was concerned

with the preemptive reach of FIFRA and whether it extended

to local regulation of pesticide use. As the Fifth and other

circuits have noted, the Mortier Court held that exclusion of

political subdivisions from the ability to regulate could not

be inferred from FIFRA’s text, particularly where such

regulatory authority was expressly conferred upon the States

and where political subdivisions are components of the very

entity the statute empowers. Jd. at 607-08. The majority of

federal circuit courts addressing the FAAAA’s preemptive

reach have drawn a distinction between the Mortier decision,

which addressed FIFRA, and the text of the FAAAA. The

distinction rests on FIFRA’s silence with respect to political

subdivisions and the FAAAA’s reference to political

subdivisions several times in its text, though not in the

context of the safety exemption. Faced with this wording,

courts have held that the omission of a reference to political

subdivisions from the safety exemption was no accident and

that Mortier does not require that the phrase “political

subdivisions” be read into the word “State” every time it is

used in a statute. Stucky, 260 F.3d at 443; Petrey, 246 F.3d at

562; Tocher, 219 F.3d at 1051; Mayer, 158 F.3d at 547.

What those courts fail to realize about Mortier is that its

reasoning went beyond merely reading the words “political

subdivisions” into the word “State” for purposes of

determining what entities were authorized to regulate

pesticide use directly. Instead, the Court’s holding rested on

giving effect to the express preservation of a State's ability

to regulate, when that ability might be exercised through

delegation to a political subdivision such as a municipality

— a holding that has been ignored by every circuit but the

Second. Ace, 171 F.3d at 775-76, quoting Mortier, 501 U.S.

at 608 (“the more plausible reading of FIFRA’s authorization

to the States leaves the allocation of regulatory authority to

the ‘absolute discretion’ of the States themselves, including

the option of leaving local regulation of pesticides in the

hands of local authorities”); see also Mortier, 501 U.S. at

608 (“to read this provision as pre-empting localities would

also require the anamolous result of pre-empting the actions

of any agency to the extent it exercised state-delegated

powers that included pesticide regulation”), and at 609

(“While this statement indicates an unwillingness by

Congress to grant political subdivisions regulatory authority,

it does not demonstrate an intent to prevent the States from

delegating such authority to its subdivisions, and still less

does it show a desire to prohibit local regulation altogether”)

(emphasis added).

C. The City of San Antonio Has Acted in Its Proprietary

Capacity in Opting for a Single-Vendor Towing

System

When a municipality acts in its proprietary capacity,

contracting for its own benefit, its actions are not subject to

preemption by federal law. Building & Constr. Trades Council

v. Associated Builders & Contractors of Massachusetts/

Rhode Island, Inc., 507 U.S. 218, 226-27 (1993) (“Boston

Harbor”). This Court has distinguished between the State

acting as a market regulator and the State acting as a market

participant, explaining that “where a State acts as a participant

in the private market, it may prefer the goods or services of

its own citizens, even though it could not do so while acting

as a market regulator.” College Sav. Bank v. Florida Prepaid

Postsecondary Educ. Expense Bd., 527 U.S. 666, 685 (1999).

Several circuit courts have also addressed the applicability

of the municipal proprietor exception to preemption under

the FAAAA (the Fifth Circuit having done so twice), and,

again, the results have varied.

1. The Fifth Circuit First Addressed the Issue and

Has Done So Inconsistently

In Cardinal Towing & Auto Repair, Inc. v. City of

Bedford, 180 F.3d 686 (Sth Cir. 1999), the Fifth Circuit

upheld a city’s right to contract for the provision of towing

services, applying the analysis adopted by this Court in

Building & Constr. Trades Council v. Associated Builders &

Contractors of Massachusetts/Rhode Island (“Boston

Harbor’), 507 U.S. 218 (1993). In Boston Harbor, this Court

held that when a municipality acts as a participant in the

market, in a narrow and focused manner akin to other market

participants, the city is not acting as a regulator and its actions

are not subject to preemption. Boston Harbor, 507 U.S. at

227-33. The Cardinal Towing court explained the two-part

test for determining whether the city is acting as market

participant or regulator: (1) whether the challenged action

reflects the city’s own interest in the “efficient procurement

of needed goods and services, as measured by comparison

with the typical behavior of private parties in similar

circumstances”; and (2) whether the narrow scope defeats

an inference that the “primary goal was to encourage a general

policy rather than address a specific proprietary problem.”

Cardinal Towing, 180 F.3d at 693. It determined that in the

context of “true nonconsent tows,” the market participant

exception applied and saved the City provisions from

preemption. /d. at 693-94.

Here, the City of San Antonio has a proprietary interest

in the efficient procurement of towing services on behalf of

the City to maintain the public ways. (R. 375-77, 476-77,

1040-44) The City’s actions in contracting for the provision

of these services is akin to a private property owner’s

contracting with a towing company to provide a tow from

his land. The contract at issue in this case, along with relevant

ordinances and code provisions, extend only to City-

authorized tows, i.e., a narrowly-defined area limited to, for

example, vehicles that have been abandoned or involved in

a collision and not affecting towing from private property.

This narrow scope does not create or encourage a general

policy that affects the towing industry at large. Instead, the

system affects only those tows authorized by the City, which

are only those tows from public ways in certain

circumstances; and there exists no record support for the

notions that the City’s system affects a significant portion of

the towing services market or that it is intended to implement

a public regulatory plan, though the Fifth Circuit drew its

own unsupported conclusions in that regard. Stucky, 260 F.3d

at 439. Accordingly, the City’s actions are proprietary, not

regulatory, in nature, and not subject to preemption.

The Fifth Circuit’s rejection of the Petitioners’ position

in Stucky rested solely on the distinction between consent

and nonconsent tows, a distinction allegedly set forth in

Cardinal Towing. Stucky, 260 F.3d at 437. However, the

Bedford towing system addressed in Cardinal Towing

actually affected “consent tows” as the Stucky panel defined

that term. In Stucky, the court rejected the notion that all tows

from the scene of accidents on public ways are properly

characterized as nonconsensual. /d. at 434 n.11. However,

the Bedford system defines a “nonconsent tow” as “any tow

conducted without the permission of, or noi at the direction

of, the vehicle’s legal or registered owner or such owner’s

authorized representative.” BEDFORD, TEX., MUN. Cope § 126-

156. Furthermore, regardless of the definition, “certified law

enforcement officials may control the scene of an accident

in the manner they deem appropriate,” and tow companies

are specifically prohibited from soliciting business at or near

the scene of wrecks. /d. at §§ 126-156, 126-157. Thus, it is

not at all clear that the consent/nonconsent dichotomy should

be the measuring stick for determining the application of

Boston Harbor, given that the distinction has been applied

differently within the Fifth Circuit, as well as among

the various circuit courts that have addressed it.

2. The Circuit Courts Have Distinguished Between

Consensual Versus Nonconsensual Tows in

Markedly Different Ways

All the circuit courts that have addressed application of

the proprietary exception to preemption under the FAAAA

have based their determination on whether the ordinance(s)

in question relates to consensual or nonconsensual tows.

Petrey, 246 F.3d at 558-59 (holding that challenged municipal

towing provisions, which dealt solely with those towers

wishing to perform non-consensual police tows for the City,

were proprietary in nature and not preempted); Jocher, 219

F.3d at 1049 (holding that municipal code provision, which

covered nonconsensual tows, escaped preemption by virtue

of municipal-proprietor exception). However, the definitions

used to delineate between the two types and where exactly

that line is drawn varies from circuit to circuit.

In Tocher, for example, the court characterized as

“nonconsensual tows” those that concern “abandoned,

disabled, stored or impounded vehicles from public or private

property,” but went on to say that the City, pursuant to its

ordinance and rotational tow list, wanted merely to create a

“reliable list of towing companies who could render quick

and efficient towing services for the City.” Tocher, 219 F.3d

at 1049 (emphasis added). The Ninth Circuit was quick to

note that the City of Santa Ana’s scheme “in no way affects

the relationship between towing companies and the general

public” because the code’s scope covered “only contracts

between the City and towing companies.” Jd.

In Petrey, the Sixth Circuit defined all police-ordered

tows as nonconsensual. Petrey, 246 F.3d at 558. In addressing

a municipal provision that related to consensual tows,

the Petrey court explained that it did not escape the

preemptive effect of the Act because it applied to tow drivers

“not doing work for the Toledo Police Department.” /d. at

559. And in Mayer, although the Eleventh Circuit did not

address the market participant doctrine, it did define

consensual and nonconsensual tows differently from other

circuits. Consensual tows were defined as those “which occur

when the owner of a vehicle expressly requests towing

services to be provided by a specific towing company and

enters a private contract with the towing company for the

services.” Mayer, 158 F.3d at 541. Nonconsensual towing

services were defined as occurring “when law enforcement

or other local authorities determine that a vehicle must be

towed and the owner of the vehicle is not afforded the

opportunity to request towing services from a specific

company. An example of a nonconsensual tow arises when

an abandoned car is impounded by police.” /d. at 541 n.2.

Thus, the Mayer and Petrey courts used definitions like

those of the City, and much less restrictive than those used

by the Fifth Circuit in Stucky. In fact, the Fifth Circuit’s

definition of nonconsensual tows was much more expansive

in the Cardinal Towing decision, which held all ordinances

relating to nonconsensual tows fall within the City’s

proprietary function and outside of any preemptive effect of

the FAAAA. Finally, the statute has its own definition. In

discussing the regulation of prices for non-consent tows, the

statute expressly characterizes them as those “performed

without the prior consent or authorization of the owner or

operator of the motor vehicle”? — again a much broader

definition than employed by the Stucky court. 49 U.S.C.

§ 14501(c)(2)(C).

3. The Only Relevant Question Under Boston

Harbor 1s Whether the City Is Acting as a Market

Participant

Not only is it unclear where the line should be drawn

between consent and nonconsent tows, but the question

remains whether this should be the measuring stick at all.

The Cardinal Towing court used this delineation because it

fit nicely into its “consumer” model, i.e., whether the

proprietary exception applied depended upon whether the

City was the “consumer” of the towing services. Only if there

were no other consumer available could the City step into

those shoes. However, the tests as stated in Cardinal Towing

and applied by the district court under review demonstrate

that the question is much less superficial than that. Instead,

the question is whether the City is acting in its own interest

and to address a specific proprietary problem, rather than

attempting to regulate an entire industry. Cardinal Towing,

180 F.3d at 693; Stucky v. City of San Antonio, 2000 WL

33348252, *2 (W.D. Tex., Apr. 4, 2000). Whether a consumer

other than the City is available to make a towing decision,

the ordinances and single-vendor towing system apply only

to tows directed by the City from public streets and are aimed

at eliminating the situations that arise from tow truck races

to accident scenes, which serve to make the City’s job of

maintaining order on public ways more difficult. Cardinal

Towing, 180 F.3d at 696 (explaining that City acts “in the

pursuit of its own interests” in obtaining towing services “to

maintain traffic flow in the wake of an accident and remove

abandoned vehicles blighting their environment”). As

explained by the district court:

The City ordinances deal exclusively with City-

directed tows; there is no effort by the City

evidenced in the record to affect the conditions

under which tow operators conduct their business

otherwise. The City’s policies do not reach the

general towing industry or the availability of

wreckers, the proper equipment, or response time

required outside of City-directed tows. While the

City’s scheme does include consent tows, the City

has argued that the inclusion narrowly addresses

its proprietary concerns — the swift and efficient

removal of disabled vehicles from City streets. . . .

The Court cannot say that these concerns are not

legitimate and certainly cannot say that they mask

a desire on the part of the City to regulate its

private towing companies.

Stucky, 2000 WL 33348252, at *4. The City is not attempting

to regulate; instead, its efforts reflect the purchase of “services

that its operations require in the open market.” Stucky, 260

F.3d at 433; see also Cardinal Towing, 180 F.3d at 693

(“Courts have similarly shielded contract specifications from

preemption when they applied to a single discreet contract

and were designed to insure efficient performance rather than

advance abstract policy goals”).

Highlighting the erroneous reliance on consent versus

nonconsent tows as the litmus test for determining whether

the City is acting as participant or regulator, the Texas

Legislature amended the definitions of consent and nonconsent

tows on September 1, 2001. Specifically, “consent” tow has

been clarified:

“Consent tow” means any tow of a motor vehicle

initiated by the owner or operator of the vehicle

or by a person who has possession, custody, or

control of the vehicle. The term does not include

a tow of a motor vehicle initiated by a peace

officer investigating a traffic accident or a traffic

incident that involves the vehicle.

TEx. TRANSP. CopDE § 643.201 (Vernon Supp. 2002). The Fifth

Circuit, in its opinion denying the petitions for rehearing,

dismissed the amendments as irrelevant, stating that the City

could not escape the preemptive effect of section 14501(c)

simply by redefining “consent tow.” Stucky v. City of San

Antonio, 266 F.3d 342 (Sth Cir. 2001) (“The new statutory

definitions add nothing to the City’s failed argument that the

mere presence of a city officer makes for a non-consent tow’’).

The Fifth Circuit rejected the relevance of the amendments

though the court itself had relied on the legislative definitions

to support its earlier decision and even though the system

addressed by the Fifth Circuit in Cardinal Towing relied on

definitions similar to those adopted by the amendment.

Stucky, 260 F.3d at 434 n.11 (“We abide by those definitions”).

What the amendment does is give weight to the district court’s

discussion of and focus on the City’s goals, rather than

whether the driver/owner has the capacity to consent, contrary

to Stucky’s approach.

Furthermore, the limited scope of the City of San

Antonio’s towing system as a whole more closely approaches

that allowed in Cardinal Towing, rather than the “industry

licensing schemes and other industry wide regulations” which

have been found within the preemptive effect of the FAAAA

in Petrey and Tocher. Though the Fifth Circuit below

recognized that the City’s efforts did not come near those

schemes struck down in Petrey and Tocher, it failed to

recognize the limited scope of the City’s system as a basis

for rejecting the notion that the City acted in an attempt to

regulate the entire towing industry. Stucky, 260 F.3d at 437.

Recognizing that it was “unable to determine, based on an

analytically satisfying continuum, whether the instant

Ordinances are within Cardinal Towing’s ‘narrow scope,’ ”

the Stucky Court turned to the purposes behind the

ordinances, which it found to be safety. Jd. at 437-38.

The parties below conceded that safety was the

motivating factor, but the Fifth Circuit, in contrast with this

Court’s precedent, asked the wrong question. The question

is not whether the City, in acting, is attempting to satisfy its.

duties as a governmental entity — it will always be

attempting to accomplish those objectives. Instead, the

question is, when the City acts, is it doing so in an effort to

regulate or is it merely purchasing the services that are

required for the accomplishment of its tasks. Boston Harbor,

507 U.S. at 227-33. The Stucky court went on to reject the

argument that the safety purpose behind the ordinances affects

the preemptive effect of the FAAAA on nonconsent tows.

Stucky, 260 F.3d at 438 n.19 (“That the City may have initially

entered into the single-vendor system for safety reasons,

however, does not affect the analysis under Cardinal

Towing”). In fact, that the City had as its purpose to maintain

a safe accident scene, actually defeats any notion that the

City was attempting to regulate the towing industry at large.

CONCLUSION

The construction placed upon the Federal Aviation

Administration Authorization Act by the Fifth Circuit

constrains a State’s ability to regulate in the area of safety by

delegating its authority to municipalities. That approach is

contrary to this Court’s precedent, other federal and state

court decisions, and the express language of the FAAAA.

Furthermore, in failing to recognize the ability of the City of

San Antonio to participate in the towing market, free from

the FAAAA’s preemptive effect, the Fifth Circuit has prohibited

the procurement of services necessary for the City to carry

out its duties and has erroneously ascribed a regulatory motive

to the City based on a limited foray into the towing market.

The Fifth Circuit itself has been inconsistent in its approach

to the FAAAA’s preemptive reach, and has demonstrated

itself all too eager to find preemption in an area within the

State’s traditional police powers and without evidence of any

regulatory intent on the City’s part. Given the importance of

these issues, the far-reaching consequences of the Fifth

Circuit’s decision, and the absence of uniformity among the

circuits and among other federal and state courts on these

questions, this Court should grant the petition for writ of

certiorari and reverse the judgment of the United States Court

of Appeals for the Fifth Circuit.

Respectfully submitted,

JACQUELINE M. STROH ALAN WRIGHT

Counsel of Record | DeBRA J. McCoMAs

Crorts & CALLAWAY Haynes & Boone, L.L.P.

A PROFESSIONAL CORPORATION 901 Main Street

112 East Pecan Street Suite 3100

Suite 800 Dallas; Texas 75202

San Antonio, Texas 78205 (214) 651-5000

(210) 299-0289 Attorneys for Petitioner

DEBORAH LYNNE KLEIN Texas Towing Corporation

Office of the City Attorney

Assistant City Attorney IV

P.O. Box 839966

San Antonio Texas 78283

(210) 207-8950

Attorneys for Petitioner

City of San Antonio

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.