Tocher v. City of Santa Ana

Citations: 219 F.3d 1040; 2000 Daily Journal DAR 7743; 2000 Cal. Daily Op. Serv. 5821; 47 Fed. R. Serv. 3d 145; 2000 U.S. App. LEXIS 16128; 2000 WL 966896Docket: Nos. 97-55628, 97-55660

Court: Court of Appeals for the Ninth Circuit; July 14, 2000; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

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Patrick Tocher, operator of a tow truck business in Santa Ana, California, initiated legal action against the City of Santa Ana, claiming that the city's towing regulations are preempted by 49 U.S.C. 14501(c). The district court agreed, ruling that the ordinances were indeed preempted and issued a permanent injunction against the City, prohibiting enforcement of any laws concerning the pricing, routing, or services of towing businesses and individuals involved in towing. The City of Santa Ana and the Santa Ana Police Towing Association appealed the decision. 

Santa Ana’s municipal regulations require towing businesses and operators to obtain permits, maintain storage facilities, adhere to specific business hours, and follow various operational standards, including obtaining written consent for consensual tows and notifying police for non-consensual tows. Towing operators must also secure an operator’s permit, which involves fees and background checks. The City has established a rotational tow list for police-ordered towing services, limited to eight permitted companies. 

Tocher's business faced citations and threats of legal action for non-compliance with these regulations, prompting his lawsuit to challenge the enforcement of the ordinances. He argued that the City’s laws were preempted by the Federal Aviation Administration Authorization Act of 1995, as amended. The district court initially issued a preliminary injunction, followed by a bench trial that confirmed Tocher’s entitlement to permanent injunctive relief based on the finding that the City's towing ordinances conflicted with federal law.

The district court has issued an injunction against the City of Santa Ana and its officials, prohibiting them from enforcing specific provisions of the Santa Ana Municipal Code (sections 32-81 through 32-107) and certain sections of the California Vehicle Code related to tow truck business regulation (including Cal. Vehicle Code 21100(g), 22650, 22651.1, and others). After the court ruled in favor of Tocher, the City sought to amend the judgment while SAPTA attempted to intervene as of right under Rule 24(a) of the Federal Rules of Civil Procedure. The district court denied both motions, leading to appeals from SAPTA and the City.

The review of the decision to deny intervention is conducted de novo. For intervention as of right under Rule 24(a), the applicant must demonstrate timeliness, a significantly protectable interest, potential impairment of that interest, and inadequate representation by existing parties. Despite SAPTA's motion being filed post-judgment, it was deemed timely as it was submitted before the appeal period expired and while the City’s motion to amend was pending. SAPTA's intervention did not prejudice Tocher, as it shared similar legal arguments with the City and highlighted a legitimate reason for the timing of its intervention—specifically, that the City did not adequately represent SAPTA's interests throughout the litigation. The determination of whether SAPTA meets the remaining requirements of Rule 24(a) is based on precedent established in the case of Mendonca.

Californians for Safe and Competitive Dump Truck Transportation filed a lawsuit against the California Department of Transportation, claiming that section 14501(c) preempted California's prevailing wage law. The court found that the International Brotherhood of Teamsters could intervene in the case based on four criteria: (1) timely filing of the motion, (2) significant interest of members in the prevailing wage, (3) potential impairment of members' rights if preemption was found, and (4) inadequate representation of Teamsters' interests by the Department. Similarly, the court determined that the San Antonio Professional Tow Operators Association (SAPTA) also met these requirements for intervention. The district court's denial of SAPTA's motion to intervene was deemed erroneous, leading to a reversal of that order.

The excerpt further outlines the framework for reviewing federal preemption under the Supremacy Clause, emphasizing that state police powers should not be overridden by federal law unless explicitly intended by Congress. Preemption can occur through explicit statutory language, actual conflict with state law, or when federal law occupies a legislative field thoroughly enough to exclude state regulation. The presence of a congressional preemption statute indicates that issues outside its scope are not preempted. In this case, the determination of whether the Federal Aviation Administration Authorization Act (FAAA) preempts city regulations concerning towing operations hinges on the interpretation of the FAAA’s preemption provisions.

In 1994, Congress enacted the Federal Aviation Administration Authorization Act (FAAA) to deregulate the motor carrier industry, including a broad preemption statute under 49 U.S.C. 14501(c). This statute prohibits states or local authorities from enacting laws related to the price, route, or service of motor carriers transporting property, with specific exceptions for safety regulations, highway route controls, insurance requirements, and unauthorized towing services. Additionally, states may regulate intrastate transportation practices related to uniform cargo liability, bills of lading, cargo credit rules, and certain antitrust immunities.

For a state or local law to be preempted under 49 U.S.C. 14501(c), it must relate to a motor carrier's price, route, or service and not fall under the stated exceptions. Regulations have a direct impact if they significantly affect a carrier's operations. In the case of SAMC, the towing regulations impose a comprehensive permit scheme that establishes strict entry requirements, such as insurance proof and vehicle storage proximity, which can limit competition in the towing industry. If applicants are denied permits, it exacerbates the competitive landscape for towing services, potentially conflicting with the FAAA's goal of promoting competition.

Ordinances regulating towing businesses impact the pricing, routing, and service of motor carriers, as they impose restrictions on towing rates, advertising, business hours, and customer transactions. These regulations can raise operational costs and directly affect customer relationships with towing companies. Violations of these ordinances may lead to revocation or suspension of towing permits, reducing the number of towing businesses and competition in the City. Consequently, the City’s towing regulations and California Vehicle Code provisions are preempted by 49 U.S.C. 14501(c)(1), unless specific exceptions apply. The California statutes governing payment acceptance and vehicle removal from private property, along with local regulatory authority, similarly influence towing services and pricing, making them subject to preemption. 

The preemption statute, 49 U.S.C. 14501(c)(1), is supported by its language, and its intent is reinforced by section 14501(c)(2)(C), which provides an exception for state or local regulations on the price of non-consensual towing services. This reflects Congress's broader aim to limit state and local regulation of the towing industry, which was enacted to prevent inefficiencies and increased costs caused by disparate regulatory schemes. Congress recognized that allowing varied local laws would undermine the uniformity needed for the motor carrier industry, echoing concerns about operational consistency highlighted in legislative history.

Congress aimed to prevent the fragmentation of regulatory authority over motor carriers, which would hinder the ability of towing companies to uphold consistent national or regional standards. Consequently, towing businesses are explicitly covered under section 14501(c)(1), which aligns with Congress's goal of deregulating the motor carrier industry. Jurisdictions that have examined this section—such as the Fifth and Ninth Circuits—affirm that state or local regulations on towing services fall under its preemptive scope. Section 14501(c)(1) broadly preempts state economic regulations concerning intrastate towing, specifically targeting laws that regulate prices, routes, or services offered by towing companies.

The permit scheme and the regulations in the Santa Ana Municipal Code (SAMC) regarding towing operators are preempted by section 14501(c)(1) unless an exception applies. The rotational tow list under SAMC section 32-107 appears to be subject to preemption but is exempted by the municipal-proprietor exception, which allows municipalities acting in a proprietary capacity to operate outside preemption. This exception focuses on whether the City is engaged in regulatory or proprietary activities. SAMC section 32-107, which allows the Santa Ana chief of police to create rules for maintaining a rotational tow list, serves to establish a reliable list of towing services for non-consensual tows and does not regulate the broader relationship between towing companies and the public. Thus, it exemplifies a municipality acting as a market participant and is not preempted by section 14501(c)(1).

The Fifth Circuit's ruling in Cardinal Towing, Auto Repair, Inc. v. City of Bedford established that a city's requirement for bidders in a non-consensual towing contract did not conflict with section 14501(c)(1). The court determined that the municipal ordinance's specifications governed solely the contract between the city and the towing provider, not affecting the general public. It highlighted that the municipality's actions were aimed at ensuring efficient performance under the contract, applying only to specific towing services and not other types like moving services.

The court acknowledged that whether regulating a single or multiple towing companies, any municipal regulation affecting only the relationship between a city and towing companies falls under the municipal-proprietor exception, which has been consistently upheld in preemption cases. The analysis applied similarly despite the absence of a rotational tow list in Cardinal Towing, as both scenarios involve the city's role as a consumer of towing services.

Additionally, the court noted the alignment of the municipal-proprietor exception with the text of section 14501(c), which resembles the ERISA preemption statute. While courts had not previously examined the exception concerning section 14501(c), the court found the statute's wording supported a proprietary analysis, suggesting it invites such interpretation. Given that section 14501(c) aims to deregulate the motor carrier industry, allowing municipalities to act as private consumers is consistent with its intent.

Consequently, section 32-107 of the SAMC, which mandates permits for rotational tow list members, is preempted due to the invalidation of the SAMC permit scheme. However, since the SAMC includes a severability clause, section 32-107 can remain effective despite this partial invalidation, negating the need to eliminate the rotational tow list entirely.

The City retains the ability to use the rotational tow list but cannot enforce permit-related rules. It attempts to defend its permit system, citing the safety regulatory exception in 49 U.S.C. 14501(c)(2)(A), which permits states to regulate motor vehicles and motor carriers regarding safety and insurance. The City contends its ordinances fall under this exception, claiming they derive authority from California law. However, this argument is flawed because the exception only applies to safety regulations established by state governments, not municipalities. Disagreement exists among federal courts regarding the delegation of regulatory authority from states to municipalities under the safety exception, creating ambiguity. The term 'State' in the relevant statute explicitly excludes municipalities. Unlike other preemption provisions, section 14501(c)(2)(A) does not reference political subdivisions, suggesting intentional exclusion by Congress to prevent municipalities from circumventing preemption through safety regulations. A strict interpretation of this section aligns with the deregulatory purpose of the statute, as allowing both states and municipalities to evade preemption could result in inconsistent regulations for motor carriers, contradicting Congress's intent. Additionally, permitting states to delegate regulatory authority to municipalities would create a situation where Congress could never fully preempt local laws while retaining state regulatory powers, undermining federalism and misinterpreting the Supremacy Clause.

Section 14501(c)(2)(A) prohibits states from delegating regulatory authority to municipalities, meaning that the safety exception in this section does not exempt provisions of the San Antonio Municipal Code (SAMC) from the general preemption rule under section 14501(c)(1). However, regulations related to motor vehicle safety, specifically sections 22650 and 22658.1 of the California Vehicle Code, are not preempted as they focus on safe towing practices. Section 22650 mandates strict adherence to the Vehicle Code for removing unattended vehicles, while section 22658.1 requires towing companies to notify property owners if a fence is damaged during vehicle removal, enhancing public safety. Other California Vehicle Code provisions enjoined by the district court are preempted as they address consumer protection instead of safety.

SAPTA argues that Congress exceeded its authority under the Commerce Clause with the enactment of 49 U.S.C. 14501, which preempts state and local regulation of motor carriers. The court confirms that automobiles are considered instrumentalities of commerce, supporting the application of section 14501 under Congress' Commerce power.

The court modifies the permanent injunction issued by the district court to allow the City to maintain its rotational tow list under SAMC section 32-107, while enforcing the underlying permit requirements is preempted. Sections 22650 and 22658.1 remain enforceable. Additionally, the court reverses the denial of SAPTA’s motion to intervene. The ruling is affirmed in part, reversed in part, and remanded, with each party bearing its own costs. The exception does not apply to SAMC as it affects towing prices and services. Randolph’s interpretation of the Commerce Clause remains valid law, despite changes in Supreme Court rulings.