Patrick P. Tocher, an Individual, Dba Pacific Coast Motoring v. City of Santa Ana Paul Walters, and City of Tustin City of Costa Mesa Santa Ana Police Department W. Douglas Franks Tustin Police Department Costa Mesa Police Department, Patrick P. Tocher, an Individual, Dba Pacific Coast Motoring, Plaintiffappellee v. City of Santa Ana Paul Walters, Santa Ana Police Towing Association, Applicant in Intervention-Appellant

Citation: 219 F.3d 1040Docket: 97-55628

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

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Patrick Tocher, operating as Pacific Coast Motoring, sued the City of Santa Ana over the city's towing ordinances, claiming they were preempted by 49 U.S.C. § 14501(c). The district court agreed, ruling that Santa Ana's regulations on towing were invalid and permanently enjoined the city from enforcing any laws concerning the pricing, routing, or services of towing businesses. The City of Santa Ana and the Santa Ana Police Towing Association appealed this decision. 

The city’s ordinances established a dual permit system mandating that towing businesses and operators obtain permits and adhere to city regulations. Key requirements included obtaining a "towing operation" permit, maintaining approved storage facilities, operating during specified hours, and ensuring written authorization for consensual tows. Towing companies were also required to notify police of non-consensual tows, provide itemized statements, and publicly display their service rates. Additionally, tow truck operators needed to secure a permit, which involved a fee and background checks by the chief of police. The ordinances allowed the police chief to maintain a rotational tow list for vehicle impoundment, currently limited to eight permitted towing companies. The appellate court has jurisdiction under 28 U.S.C. § 1291 and partially affirms and partially reverses the district court's judgment.

The City of Santa Ana employs a rotational towing list, where towing companies are dispatched to impound vehicles, with the vehicle owners responsible for towing fees. Tocher, a towing operator in Santa Ana, faced citations and threats of legal action for non-compliance with city towing regulations. In response, Tocher sued in federal court, arguing that the City’s towing ordinances were preempted by the Federal Aviation Administration Authorization Act of 1995 (FAAA). The district court granted Tocher a preliminary injunction, followed by a bench trial that resulted in a ruling favoring Tocher, confirming that the City's towing regulations were overridden by federal law. Consequently, the court enjoined the City from enforcing specific municipal code sections and certain provisions of the California Vehicle Code related to towing. After the judgment, the City and SAPTA filed motions to amend the judgment and intervene, respectively, both of which were denied by the district court. The court found that SAPTA did not prove inadequate representation of its interests by the City. The criteria for intervention as of right under Rule 24(a) include timeliness, a significantly protectable interest related to the action, potential impairment of that interest, and inadequate representation by existing parties.

To assess the timeliness of an applicant's motion to intervene, the following factors are considered: the stage of the proceedings, potential prejudice to other parties, and the reason and duration of the delay. In this case, although SAPTA filed its motion after the district court's final judgment favoring Tocher, it was deemed timely because it was submitted before the appeal period expired and while the City’s motion to amend the judgment was still pending. Additionally, Tocher was not prejudiced by SAPTA's late intervention, as SAPTA sought to join the proceedings before they concluded and raised similar legal arguments as the City. SAPTA had valid reasons for the timing of its intervention, particularly since the district court's preliminary injunction did not impact the City's rotational tow list and it became clear only after the judgment that the City's representation of SAPTA was inadequate.

The requirements for intervention as per Rule 24(a) were satisfied, paralleling the case of Mendonca, where the International Brotherhood of Teamsters was allowed to intervene due to their significant interest in the litigation and the inadequacy of the state’s representation of their interests. Similarly, SAPTA demonstrated a significant interest in the rotational tow list, which was the subject of the litigation, and a potential loss of participation if Tocher prevailed. Consequently, the district court's denial of SAPTA's motion to intervene was determined to be erroneous, leading to the reversal of that decision and the granting of SAPTA's motion to intervene.

The court's review of the district court's decisions regarding federal preemption and statutory interpretation is conducted de novo, as established by previous case law. Under the Supremacy Clause, federal laws take precedence over conflicting state laws.

Federal preemption under the Supremacy Clause begins with the presumption that state police powers are not to be overridden by federal law unless Congress clearly intends otherwise. Congressional intent is the primary criterion for preemption analysis. Federal preemption can occur in three scenarios: (1) when Congress expressly enacts a statute that preempts state law, (2) when state law conflicts with federal law, and (3) when federal law occupies a legislative field to the extent that it leaves no room for state regulation. The scope of preemption is determined by the language of the statute if it indicates Congressional intent regarding preemption. 

In 1994, Congress enacted the Federal Aviation Administration Authorization Act (FAAA) to deregulate the motor carrier industry, including a broad preemption provision. This provision prohibits states or local governments from enacting laws related to the price, route, or service of motor carriers, with specific exceptions such as safety regulations, highway route controls based on vehicle size or weight, and certain financial responsibility regulations. Notably, states retain the authority to regulate for-hire motor vehicle transportation by tow trucks if such transportation occurs without the consent of the vehicle's owner or operator. The preemption issue at hand requires determining whether the FAAA's preemption provision applies to the City’s ordinances regulating automobile towing operations.

Uniform cargo liability rules, bills of lading, cargo credit rules, and antitrust immunity related to transportation are outlined under 49 U.S.C. § 14501(c). A state or local law is preempted if it pertains to a motor carrier’s price, route, or service and is not exempt under specified regulatory exceptions. For preemption to apply, the law must significantly affect a motor carrier's operations, not just in a minor or indirect manner.

The SAMC's permit scheme for towing companies imposes stringent regulations, including proof of insurance and proximity of vehicle storage to business locations, which create barriers to entry and can negatively impact competition in the towing industry. These regulations also directly influence the pricing and operational dynamics of towing services. Violations can lead to permit revocations, further limiting the number of towing businesses and reducing competition. Consequently, the SAMC regulations are deemed to have more than an indirect effect on towing services and prices, rendering them preempted by 49 U.S.C. § 14501(c)(1), unless exceptions apply. California statutes similarly have a significant impact on towing company operations, reinforcing the preemption finding.

Sections 22651.1 and 22658(k) of the California Vehicle Code mandate that towing companies accept certain payment methods. Sections 22650, 22658(l), and 22658.1 govern the removal of vehicles from private property, while sections 21100(g) and 22850.5 empower local governments to regulate towing businesses. These statutes, along with City ordinances, govern the provision of towing services and are generally preempted unless an exception applies. The relationship between the City’s ordinances and California statutes with the federal regulation of motor carrier services is supported by the language of 49 U.S.C. § 14501(c)(1) and § 14501(c)(2)(C), which exempts laws concerning the pricing of non-consensual towing services from preemption. This legislative framework indicates a congressional intent to limit state and local regulation of towing services primarily to price matters related to non-consensual towing, as excessive regulation could lead to inefficiencies and hinder competition within the motor carrier industry. The preemption aims to avoid a fragmented regulatory environment that complicates operations for towing companies. Additionally, all three circuits that have reviewed this area have affirmed that state or local laws regulating towing services fall under the preemptive scope of § 14501(c)(1).

A rotational tow list is permissible under the market participant exception to federal preemption as outlined in section 14501(c)(1), which generally preempts state regulation of intrastate towing. The federal statute explicitly preempts state and municipal regulations affecting prices, routes, or services of towing companies. However, the permit scheme and regulations governing towing operators are preempted unless an exception applies.

In this context, the rotational tow list, governed by SAMC section 32-107, appears to fall under the preemption rule but is saved by the municipal-proprietor exception. This exception hinges on whether the City is acting in a regulatory or proprietary capacity. The analysis emphasizes the substance of the transaction, ensuring that the City does not disguise regulatory actions as contractual agreements.

SAPTA contends that the rotational tow list represents a contractual relationship between the City and member towing companies, invoking the municipal-proprietor exception. SAMC section 32-107 allows the Santa Ana chief of police to establish rules for maintaining a rotational tow list, aimed at creating a policy for towing abandoned or disabled vehicles. This provision only applies to nonconsensual tows and governs the City’s relationship with selected towing companies, designed for efficient service provision.

The rotational tow list exemplifies a municipality acting as a market participant by establishing rules for contracts with towing services specific to the City, without affecting the broader public relationship with towing companies. Consequently, section 32-107 does not constitute an attempt to regulate the motor carrier industry and remains unaffected by federal preemption, aligning with the Fifth Circuit's ruling in Cardinal Towing, which addressed the preemption of municipal requirements during the bidding for towing contracts.

The court determined that the municipal ordinance's specifications only governed the contract between the towing company and the municipality, without affecting the general public. It emphasized that the municipality's role was solely to establish specifications to ensure efficient performance of the towing contract. The specifications applied exclusively to towing contracts and did not extend to other services, like those of moving companies. The analysis remains relevant regardless of whether a single company or multiple companies are involved in towing services, as any system regulating these services for a city pertains only to the relationship between the city and the towing companies, falling under the municipal-proprietor exception in preemption cases.

The Fifth Circuit, in Cardinal Towing, noted that the municipal-proprietor exception aligns with section 14501(c) of the statute concerning motor carrier deregulation, which parallels ERISA's preemption language. The court found no reason to limit the exception to cases under NLRA or ERISA, asserting that the statute's text invites a proprietary analysis and supports municipalities acting as private consumers in the towing market.

Section 32-107 of SAMC, which mandates that all members of the rotational tow list hold towing operation permits, is preempted since the SAMC permit scheme itself is preempted. However, due to SAMC's severability clause, section 32-107 can still function effectively even if partially invalidated, negating the need to entirely strike down the rotational tow list.

The City is allowed to use a rotational tow list but cannot enforce permit-related rules. To defend its permit scheme and towing business regulations from federal preemption, the City cites 49 U.S.C. § 14501(c)(2)(A), which preserves state safety regulatory authority over motor vehicles. The City claims its ordinances are safety regulations under this section and are enacted under California's delegation of authority to municipalities (Cal. Veh. Code § 21100). However, this argument is flawed because § 14501(c)(2)(A) explicitly exempts only state-enacted safety regulations, not those from municipalities. There is a lack of consensus among federal courts regarding whether states can delegate safety regulation authority to municipalities, as seen in contrasting cases. The term "State" in the statute includes only the 50 states and D.C., excluding municipalities. While other sections of the statute allow political subdivisions to regulate certain areas, § 14501(c)(2)(A) uniquely does not mention such authority, indicating intentional exclusion by Congress. A strict interpretation of this provision aligns with Congress's deregulation policy and prevents a scenario where local regulations could proliferate under the guise of safety regulation, contradicting the preemption goals of the statute.

A state cannot delegate its regulatory authority to municipalities for preemption purposes under 49 U.S.C. § 14501(c)(2)(A), as this would necessitate Congress to preempt all state and local laws, conflicting with federalism principles and the Supremacy Clause. The safety exception in § 14501(c)(2)(A) exempts certain state regulations from preemption, specifically sections 22650 and 22658.1 of the California Vehicle Code, which govern the removal of vehicles from private property and are designed for public safety. Consequently, these sections are not preempted under federal law, unlike other provisions in the California Vehicle Code related to consumer protection, which are preempted. Additionally, Congress's authority under the Commerce Clause to enact 49 U.S.C. § 14501 is affirmed, as motor carriers are considered instrumentalities of commerce. The court modifies the district court's permanent injunction, allowing the City to maintain its rotational tow list under SAMC section 32-107 while declaring the underlying permit requirements unenforceable, and affirms the applicability of sections 22650 and 22658.1. The district court's denial of SAPTA's motion to intervene is reversed. The ruling is affirmed in part, reversed in part, and remanded, with each party bearing its own costs.