Argued and Submitted, San Francisco California
February 11, 2015.
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Appeal from the United States District Court for the Northern District of California. D.C. No. 3:10-cv-03184-CRB. Charles R. Breyer, Senior District Judge, Presiding.
Federal Aviation Administration Authorization Act / Preemption
The panel filed (1) an order denying petitions for panel rehearing and rehearing en banc and (2) an amended opinion affirming in part and reversing in part the district court's summary judgment in an action challenging San Francisco ordinances that comprehensively regulate the towing industry within the city and provide a number of conditions and requirements concerning towing permits.
Tow car firms are " motor carriers" under the Federal Aviation Administration Authorization Act, and the San Francisco ordinances, known as the " Permit Scheme," generally relate to a price, route, or service of a motor carrier. The panel held, therefore, that Permit Scheme provisions were preempted by the FAAAA unless they fell within the FAAAA's savings clauses, which included a " safety exception."
Agreeing with the Second Circuit, the panel held that the safety exception covered regulations related both to the safe physical operation of the tow trucks themselves and to the safety of other vehicles and individuals involved in the towing process. The panel held that Permit Scheme's permit requirements fell within the safety exception, as did multiple other Permit Scheme provisions, including permit application requirements, permit fee and penalty provisions, and recordkeeping and brochure requirements. The panel also held that possession and display requirements were not subject to preemption. Finally, the panel held that the Permit Scheme's complaint system requirement fell within the safety exception, but its business plan requirement did not and therefore was preempted. The panel remanded the case to the district court for further proceedings.
Patrick J. Whalen, The Law Offices of Brooks Ellison, Sacramento, California, for Plaintiff-Appellant.
Wayne Snodgrass (argued), Deputy City Attorney; Dennis J. Herrera, City Attorney; Vince Chhabria, Deputy City Attorney, San Francisco, California, for Defendant-Appellee.
Before: Michael Daly Hawkins, Richard A. Paez, and Marsha S. Berzon, Circuit Judges.
BERZON, Circuit Judge:
The City and County of San Francisco requires tow truck drivers and towing firms to obtain permits to operate and conduct business within San Francisco. The City enacted two ordinances, Articles 30 and 30.1 of the San Francisco Police Code (the " Permit Scheme" ), which comprehensively regulate the towing industry within the city and provide a number of conditions and requirements concerning the towing permits.
The California Tow Truck Association (" CTTA" ) challenged the Permit Scheme, contending that it is preempted by the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. § 14501 (" FAAAA" or the " Act" ). After the district court initially granted partial summary judgment, the parties appealed to this court. See Cal. Tow Truck Ass'n v. City & Cnty. of S.F., 693 F.3d 847 (9th Cir. 2012) (" CTTA I" ). We held that the district court did not analyze the Permit Scheme as required by our precedent, and so vacated the judgment and remanded for the required provision-by-provision analysis. See id. at 866.
Following remand, the district court upheld nearly all of the Permit Scheme, holding some provisions outside the ambit of the Act's express preemption clause, 49 U.S.C. § 14501(c)(1), and others covered by the Act's savings clauses, id. § 14501(c)(2)(A)-(C). In particular, the district court determined that many of the provisions fell within the FAAAA's " safety exception," id. § 14501(c)(2)(A), because they are " genuinely responsive to safety concerns." City of Columbus v. Ours Garage & Wrecker Serv., Inc., 536 U.S. 424, 442, 122 S.Ct. 2226, 153 L.Ed.2d 430 (2002). The district court thus granted the City's cross-motion for summary judgment, from which CTTA appeals. With the exception of the challenge to the Permit Scheme's business plan requirement, we affirm.
Pursuant to its authority under California law, see Cal. Veh. Code § 21100(g)(1), the City enacted the Permit Scheme. Article 30 of the Permit Scheme regulates " tow car drivers," S.F. Police Code § 3000 et. seq., and Article 30.1 regulates " tow car firms," id. § 3050 et seq.  " Together, Articles
30 and 30.1 set forth a comprehensive regulatory regime requiring tow truck drivers and towing firms to obtain permits to operate and conduct business in San Francisco." CTTA I, 693 F.3d at 851.
Article 30 provides that " [n]o person shall drive or operate a tow car within the City . . . without first obtaining a permit from the Chief of Police . . . ." S.F. Police Code § 3000. To obtain a permit, tow car drivers must submit identifying information, and disclose any criminal arrest history. See id. § 3002. Along with the application, applicants must submit fingerprints, passport-size photographs, a letter from an employer, and a filing fee. Id. § 3003. After receiving an application for a permit, " [t]he Chief of Police shall . . . make an investigation without unnecessary delay . . . and grant such application," unless the applicant was convicted of violating, or acted in violation of, certain enumerated criminal statutes, or falsified information on the application. Id. § 3004.
The tow car driver must keep the permit, which contains the names and residences of the driver and employer and other identifying information, in " his immediate possession at all times while driving or operating a tow car and shall exhibit such permit on demand of any peace officer." Id. § § 3006, 3007. The permits last for one year, are renewable upon payment of the annual license fee, id. § 3008, and can be revoked after a hearing if the Chief of Police " finds that grounds exist which would have constituted just cause for refusal to issue such permit," id. § 3011. Driving or operating a tow car within the City without a permit, or not maintaining possession of a permit while driving or operating a tow car, is a misdemeanor. Id. § 3012.
The Permit Scheme's requirements for tow car firms are similar to those for tow car drivers. As with tow car drivers, " [n]o person shall engage in or conduct business as a tow car firm within the City . . . without first obtaining a permit from the Chief of Police . . . ." Id. § 3050. Applicants for such permits must provide not only identifying information about themselves and their business, id. § 3052(1)-(2), but also additional information, including: details of " every tow car that will be operated by the tow car firm," id. § 3052(3); " [a] description of the applicant's business plan, and proposed services to be provided, including . . . a system for handling complaints that is acceptable to the Chief of Police," id. § 3052(4); the name and permit number of all tow car operators employed by the firm, id. § 3052(5); evidence of a minimum level of insurance, id. § 3052(6); and a " record of all crimes of which the applicant has been convicted, plead[ed] guilty, or plead[ed] no contest," id. § 3052(7). Like tow car driver applicants, tow car firm applicants must submit fingerprints, photographs, and a filing fee. Id. § 3053.
A tow car firm permit shall be granted unless the Police Department finds that the applicant, among other things, does not possess a minimum level of insurance, does not possess requisite tow car equipment, or has been convicted of certain crimes. Id. § 3054. Every firm issued a permit must display the permit " in a conspicuous place within the tow car firm business address, so that the [permit] may be readily seen by persons entering the premises." Id. § 3055. The Police Department may suspend or revoke a tow car firm permit for any of the grounds listed in § 3054, as well as for additional reasons, including failing to maintain required levels of insurance and employing a tow car
operator who lacks a valid operating permit. Id. § 3056.
Like the individual tow car driver permits, a tow car firm permit lasts for a year and is renewable upon payment of an annual license fee. Id. § 3062. Article 30.1, however, contains some additional requirements for tow car firm permit-holders. For example, tow car firms are required regularly to submit proof of insurance and evidence of registration, and must notify the Police Department of the number of tow vehicles or changes in tow car drivers' employment status. Id. § 3058. Additionally, " [t]ow car firm vehicles may be inspected for code and safety violations by any peace officer." Id. § 3059. Tow car firms are also required to maintain records of each vehicle towed for three years and to make such records available for inspection by any peace officer. Id. § 3060. Conducting business without a tow car firm permit or failing to display the permit at the tow car firm business is a misdemeanor. Id. § 3064.
The San Francisco Board of Supervisors amended Article 30.1 in 2009 to include a brochure requirement. See id. § 3055.2(c). When a vehicle has been towed, tow car firms must " provide information to towed-vehicle owners by displaying and making available a brochure 'in a conspicuous place in the location where a vehicle owner must come to reclaim their towed vehicle.'" CTTA I, 693 F.3d at 854 (quoting S.F. Police Code § 3055.2(c)). The brochure, developed by the City's police department, consists of " a concise summary of California law, including the maximum rate that can be legally charged for a private property tow and the rights and responsibilities of all parties who participate in towing from private property . . . ." S.F. Police Code § 3055.2(b). Non-compliance with this requirement triggers an administrative penalty of $500. Id. § 3055.2(f).
When it promulgated the brochure requirement in 2009, the Board of Supervisors made a number of legislative findings, including:
(i) that there are frequent incidents of illegal towing from private property in San Francisco; and
(ii) that there is a significant risk to the safety of residents and visitors when illegal towing from private property occurs at night; and
(iii) that there is a risk to public health and safety when the vehicles of senior citizens and persons with disabilities are illegally towed from private property; and
(iv) that illegal towing from private property affects vulnerable populations when people of limited economic means are required to pay hundreds of dollars to recover their vehicle, or are subjected to deficiency claims by collection agencies if they could not afford to pick up their vehicle even though the vehicle was illegally towed; and . . .
(ix) that consistent adherence to legal towing practices will substantially increase the quality of life for residents and the experience of visitors to San Francisco.
S.F. Police Code § 3055.2(a). Both Articles 30 and 30.1 include severability clauses, providing that if any part is " held to be unconstitutional or invalid," such a decision " shall not affect the validity or effectiveness of the remaining portions." Id. § § 3013, 3065.
In July 2010, CTTA, a nonprofit organization representing more than 1,000 towing companies doing business in California, filed a complaint against the City in San
Francisco Superior Court. According to CTTA, its members had been " harassed and subject to citations, fines, and in some cases the impound of their tow truck . . . for failing to obtain a permit." Moreover, it alleged, " [t]he ability of CTTA members to conduct their business is adversely affected by the San Francisco ordinance, because it subjects them to great uncertainty as to whether they are able to conduct business in, around, and through the City." Several owners and operators of tow car firms also ...