City of San Juan Capistrano v. Cpuc ( 2019 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CITY OF SAN JUAN CAPISTRANO, a No. 17-56693
California municipal corporation,
Plaintiff-Appellant, D.C. No.
8:17-cv-01096-
v. AG-E
CALIFORNIA PUBLIC UTILITIES
COMMISSION, a California state OPINION
agency,
Defendant-Appellee.
Appeal from the United States District Court
for the Central District of California
Andrew J. Guilford, District Judge, Presiding
Argued and Submitted March 8, 2019
Pasadena, California
Filed September 11, 2019
Before: Andrew J. Kleinfeld, Jacqueline H. Nguyen,
and Ryan D. Nelson, Circuit Judges.
Opinion by Judge R. Nelson;
Concurrence by Judge R. Nelson
2 CITY OF SAN JUAN CAPISTRANO V. CPUC
SUMMARY *
Civil Rights
The panel affirmed the district court’s dismissal of
claims for lack of standing in an action brought by the City
of San Juan Capistrano asserting that the California Public
Utility Commission’s approval of an electrical grid project
violated the City’s due process rights.
Citing City of South Lake Tahoe v. California Tahoe
Regional Planning Agency, 625 F.2d 231, 233 (9th Cir.
1980), and its progeny, the panel noted that this Circuit has
consistently held that political subdivisions lack standing to
challenge state law on constitutional grounds in federal
court. Accordingly, the panel held that in this case, the City
could not challenge the Commission’s decision on due
process grounds in federal court. The panel rejected the
proposition that South Lake Tahoe bars only facial
challenges to a statute or regulation. The panel held that
South Lake Tahoe and this Circuit’s later cases relied only
on the identity of the parties, not the procedural context in
which those claims were raised.
The panel separately held that sovereign immunity
barred the City’s claims because the Commission is an arm
of the State of California. The panel held that the City
waived its right to amend the complaint to add a
commissioner because the City never asked the district court
for such relief and nothing in the City’s district court filings
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
CITY OF SAN JUAN CAPISTRANO V. CPUC 3
could be construed as a definite request for leave to add a
new party.
Concurring, Judge R. Nelson wrote separately to
highlight the potential, in the appropriate case, to revisit the
court’s per se rule that a political subdivision lacks standing
to challenge state law on constitutional grounds in federal
court.
COUNSEL
Michael J. Aguirre (argued) and Maria C. Severson, Aguirre
& Severson LLP, San Diego, California, for Plaintiff-
Appellant.
Christofer Charles Nolan (argued), Arocles Aguilar,
Jonathan C. Koltz, and Marcelo Poirier, California Public
Utilities Commission, San Francisco, California, for
Defendant-Appellee.
Peder K. Batalden (argued), Mitchell C. Tilner, and Bradley
S. Pauley, Horvitz & Levy LLP, Burbank, California;
Michael J. Perez and Jeffrey A. Feasby, Perez Vaughn &
Feasby Inc., San Diego, California; for Amicus Curiae San
Diego Gas & Electric Company.
4 CITY OF SAN JUAN CAPISTRANO V. CPUC
OPINION
R. NELSON, Circuit Judge:
The City of San Juan Capistrano contends the California
Public Utility Commission’s approval of an electrical grid
project violates the City’s due process rights. Following City
of South Lake Tahoe v. California Tahoe Regional Planning
Agency and its progeny, we hold the City cannot challenge
the Commission’s decision on due process grounds in
federal court. 625 F.2d 231, 233 (9th Cir. 1980). Moreover,
the City’s claims are barred by Eleventh Amendment
sovereign immunity. We therefore affirm.
I
The City of San Juan Capistrano (“the City”) alleges the
California Public Utility Commission (“the Commission”)
violated due process when it approved San Diego Gas &
Electric’s (“the Utility”) project to replace a transmission
line and upgrade a substation on property the Utility owns
within the City. The City opposed the project “as a duly
admitted party” in a Commission hearing. After the hearing,
the Commission administrative law judge recommended
approving an alternate project with less environmental
impact. But the assigned commissioner—after ex parte
meetings with the Utility—recommended approval of the
original project. The Commission agreed.
The Commission denied the City’s application for
rehearing. See Cal. Pub. Util. Code § 1733 (denial by
inaction). The City did not challenge the Commission’s
decision in state court. Id. § 1756 (judicial review of
Commission decisions).
CITY OF SAN JUAN CAPISTRANO V. CPUC 5
Instead, the City sued the Commission in federal court
alleging the ex parte meetings led the Commission to reject
the administrative law judge’s recommendation. The City
argued that by not giving “due consideration” to alternative
projects as required by California environmental law, the
Commission deprived the City of liberty and property
interests over its environmental integrity, cultural integrity,
and development, along with its procedural right to a fair
hearing. The City sought to enjoin the Commission from
mandating the project, a declaration that the Commission’s
approval order is not enforceable against the City, and
attorneys’ fees. The district court dismissed the suit with
prejudice, holding that the City, as a political subdivision,
lacked standing to sue the Commission and amendment
would be futile. See South Lake Tahoe, 625 F.2d at 233.
Plaintiff’s standing and Defendant’s sovereign immunity
are questions of law, which we review de novo. Daniel v.
Nat’l Park Serv., 891 F.3d 762, 765–66 (9th Cir. 2018).
II
Starting with South Lake Tahoe, 625 F.2d at 233, we
have consistently held that political subdivisions lack
standing to challenge state law on constitutional grounds in
federal court. 1 South Lake Tahoe offered no independent
1
We have held that a city, an airport authority, a health district, and
a school district all lack standing to sue a planning authority, a city, and
various state agency officials. See Okanogan Sch. Dist. #105 v.
Superintendent of Pub. Instruction for Wash., 291 F.3d 1161, 1165–66
(9th Cir. 2002); Palomar Pomerado Health Sys. v. Belshe, 180 F.3d
1104, 1106–09 (9th Cir. 1999); Burbank-Glendale-Pasadena Airport
Auth. v. City of Burbank, 136 F.3d 1360, 1362–64 (9th Cir. 1998); South
Lake Tahoe, 625 F.2d at 233. Some of the failed claims were premised
on allegations that state statutes, regulations, or procedures violated the
6 CITY OF SAN JUAN CAPISTRANO V. CPUC
reasoning for its per se standing rule. But it cited Supreme
Court and Second Circuit decisions that rejected cities’
constitutional challenges to state law, characterizing
political subdivisions as “creature[s]” and states as their
“creators.” South Lake Tahoe, 625 F.2d at 233–34 (citing
Williams v. Mayor & City Council of Baltimore, 289 U.S.
36, 40 (1933); City of Trenton v. New Jersey, 262 U.S. 182,
188 (1923); City of Newark v. New Jersey, 262 U.S. 192, 196
(1923); City of New York v. Richardson, 473 F.2d 923, 929
(2d Cir. 1973); Aguayo v. Richardson, 473 F.2d 1090, 1100–
01 (2d Cir. 1973)). 2 Here, South Lake Tahoe, and the
suing subdivision’s due process rights. Palomar, 180 F.3d at 1106–09;
Burbank, 136 F.3d at 1362–64. Other failed claims were based on
allegations that a state statute or regulation conflicted with a federal
statute, thereby violating the Supremacy Clause. Okanogan, 291 F.3d
at 1165–66; Palomar, 180 F.3d at 1107; Burbank, 136 F.3d at 1363–64.
2
Other circuits have applied the Supreme Court’s decisions in
Williams, Trenton, and Newark differently, rejecting the proposition that
these precedents announced a per se rule of standing and instead holding
that cities and other political subdivisions, as a substantive matter, lack
certain constitutional rights. The Fifth Circuit held that Williams and
Trenton did not bar a school district from claiming a state policy
conflicted with a federal school meal program. It concluded that the
Constitution alone does not interfere with the state-subdivision
relationship, but that, under the Supremacy Clause, a federal statute
might give a political subdivision a cause of action. Rogers v. Brockette,
588 F.2d 1057, 1068–69 (5th Cir. 1979); see also Branson Sch. Dist. RE-
82 v. Romer, 161 F.3d 619, 628 (10th Cir. 1998) (“Williams and Trenton
stand only for the limited proposition that a municipality may not bring
a constitutional challenge against its creating state when the
constitutional provision that supplies the basis for the complaint was
written to protect individual rights, as opposed to collective or structural
rights.”). The Second Circuit, citing “unique federalism concerns,”
recently adopted the reasoning of Rogers to allow political subdivision
challenges to state law under the Supremacy Clause. Tweed-New Haven
Airport Auth. v. Tong, 930 F.3d 65, 72–73 (2d Cir. 2019). It
distinguished its holdings in Aguayo, 473 F.2d at 1100, and Richardson,
CITY OF SAN JUAN CAPISTRANO V. CPUC 7
decisions in Burbank, Palomar, and Okanogan applying it,
control as law of the circuit. Hart v. Massanari, 266 F.3d
1155, 1171 (9th Cir. 2001) (“Once a panel resolves an issue
in a precedential opinion, the matter is deemed resolved,
unless overruled by the court itself sitting en banc, or by the
Supreme Court.”).
Perhaps recognizing its uphill battle, the City
characterizes South Lake Tahoe as a limited rule that bars
challenges to the validity of statutes or regulations but does
not bar the City’s challenge to the Commission’s “conduct
in an administrative proceeding.” It notes that “facial”
challenges to statutes are generally disfavored and asserts
that Trenton, Williams, South Lake Tahoe, Burbank, and
Palomar were all facial challenges to a statute or regulation
—barred because such challenges interfere with states’
internal political organization.
We reject the proposition that South Lake Tahoe bars
only facial challenges to a statute or regulation. South Lake
Tahoe and our later cases do not suggest that the standing
analysis was dependent on a facial challenge to a statute or
regulation rather than an administrative decision. Instead,
our cases have relied only on the identity of the parties, not
the procedural context in which those claims are raised. See,
e.g., Palomar, 180 F.3d at 1107 (“We must determine
473 F.2d at 929—both cited by South Lake Tahoe—as specific to
Fourteenth Amendment claims, which present “different”
considerations. Tong, 930 F.3d at 73 n.7. The Sixth, Seventh, and
Eleventh Circuits have interpreted Williams, Trenton, and Newark to
hold that political subdivisions have no Fourteenth Amendment rights.
S. Macomb Disposal Auth. v. Township of Washington, 790 F.2d 500,
504–05 (6th Cir. 1986); United States v. Alabama, 791 F.2d 1450, 1455
(11th Cir. 1986); Vill. of Arlington Heights v. Reg’l Transp. Auth., 653
F.2d 1149, 1152–53 (7th Cir. 1981).
8 CITY OF SAN JUAN CAPISTRANO V. CPUC
(1) whether [plaintiff] is a ‘political subdivision’ of the State
of California, and if so, (2) whether, by suing the defendants
named in this action, [plaintiff] brings this action against the
state.”).
We therefore conclude that the City lacks standing to
challenge the Commission’s decision on due process
grounds in federal court.
III
We separately hold that sovereign immunity bars the
City’s claims because the Commission is an arm of the State
of California. Pennhurst State Sch. & Hosp. v. Halderman,
465 U.S. 89, 100 (1984); see Air Transp. Ass’n of Am. v.
Pub. Utils. Comm’n of Cal., 833 F.2d 200, 203–04 (9th Cir.
1987) (holding the Commission, specifically, is entitled to
sovereign immunity). The Eleventh Amendment bars
claims against a state—including its agencies—in federal
court. Pennhurst, 465 U.S. at 97–100.
The City concedes on appeal the Commission is entitled
to sovereign immunity. But it argues for leave to amend its
complaint to add claims against a commissioner under Ex
parte Young, 209 U.S. 123 (1908), which allows suits
seeking “prospective relief” against a state official who has
a fairly direct connection to an “ongoing violation of federal
law.” Ariz. Students’ Ass’n v. Ariz. Bd. of Regents, 824 F.3d
858, 865 (9th Cir. 2016) (citing Ex parte Young, 209 U.S. at155–56). Arizona Students’ Association suggests the City
should generally be allowed leave to amend its complaint to
add an individual official as a party, assuming claims
otherwise satisfy Ex parte Young’s requirements. Id. at 871.
Below, however, the City argued that the Eleventh
Amendment did not apply to its claims against the
CITY OF SAN JUAN CAPISTRANO V. CPUC 9
Commission, only briefly suggesting the City could amend
its complaint consistent with Ex parte Young if it were
wrong. The City never asked for leave to add a
commissioner as a party, only to “add facts developed in [its]
analysis and investigation” related to the ex parte meetings.
Nothing in the City’s district court filings can be construed
as a definite request for leave to add a new party. Indeed, at
argument before us, the City conceded it never asked the
district court for such relief, and only requested such relief
in its Reply Brief.
The City has therefore waived its right to amend. See
Okwu v. McKim, 682 F.3d 841, 846 n.4 (9th Cir. 2012)
(“[Plaintiff] has waived the argument that she should be
allowed to amend her complaint to re-style some of her
§ 1983 claims . . . under the Ex Parte Young exception . . . .
She did not make that argument to the district court or in
either of her briefs on appeal.”); Walsh v. Nev. Dep’t of
Human Res., 471 F.3d 1033, 1037 (9th Cir. 2006) (finding
sovereign immunity issue forfeited on appeal where
defendant failed to re-assert a claim for injunctive relief
already in her complaint in response to the state’s motion to
dismiss).
IV
The district court properly dismissed the City’s claims
because the City lacks standing and the claims are barred by
the Eleventh Amendment.
AFFIRMED.
10 CITY OF SAN JUAN CAPISTRANO V. CPUC
R. NELSON, Circuit Judge, concurring:
Today, the panel reaffirms the court’s established per se
rule that a political subdivision lacks standing to challenge
state law on constitutional grounds in federal court. I write
separately to highlight the potential, in the appropriate case,
to revisit the court’s per se rule in light of intervening
caselaw from other circuit courts and the Supreme Court.
Nearly 40 years ago, we adopted a per se “standing” bar
on a political subdivision challenging state law in federal
court. City of South Lake Tahoe v. Cal. Tahoe Reg’l
Planning Agency, 625 F.2d 231, 233 (9th Cir. 1980)
(analyzing “whether the City . . . ha[s] standing to bring this
case”). We have not deviated from that per se bar since. See
supra at 5 n.1. When South Lake Tahoe was decided, this
standing terminology made some sense. Indeed, one of the
first cases to address this issue held that a city’s officials
were “without standing to invoke the protection of the
Federal Constitution.” Williams v. Mayor and City Council
of Balt., 289 U.S. 36, 47 (1933). Then, in Coleman v. Miller,
the Supreme Court branded the result of Williams and related
cases as a matter of “standing.” See 307 U.S. 433, 441
(1939).
Since these cases, however, the meaning of “standing”
has changed. When Williams and Coleman were decided,
“standing was not seen as a preliminary or threshold
question” as it is today. Rogers v. Brockette, 588 F.2d 1057,
1070 (5th Cir. 1979). Instead, “[a] party had standing or a
‘right to sue’ if it was correct in its claim on the merits that
the statutory or constitutional provision in question protected
its interests[.]” Id. That is why the Williams line of cases do
not mention the elements we now associate with Article III
standing, like injury-in-fact, causation, and redressability.
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992);
CITY OF SAN JUAN CAPISTRANO V. CPUC 11
see also Indian Oasis–Baboquivari Unified Sch. Dist. v. Kirk
(Indian Oasis I), 91 F.3d 1240, 1246, 1250 (9th Cir. 1996)
(Reinhardt, J., dissenting) (“[A] per se bar on standing
can[not] be reconciled with Lujan or literally dozens of other
modern standing cases.”), vacated for reh’g en banc and
dismissed on other grounds, 109 F.3d 634 (9th Cir. 1997)
(en banc).
Despite this history, we have imported “standing” from
Williams and Coleman and consistently used the term in a
string of cases as if it holds our modern understanding of the
word—that of a jurisdictional prerequisite that must be
satisfied prior to reviewing a claim on the merits. In South
Lake Tahoe, for example, we held that the question of
political subdivision standing went to our subject-matter
jurisdiction. 625 F.2d at 233. Then, in Palomar Pomerado
Health System v. Belshe—decided after Lujan—we
reiterated the doctrine as a “jurisdictional issue.” 180 F.3d
1104, 1107 (9th Cir. 1999).
Since we adopted our per se standing rule, however,
other circuits have adopted different theories in addressing
political subdivision’s right to sue a state in federal court.
The Tenth Circuit, for example, has treated it as a standing
question, barring due process claims, but not Supremacy
Clause claims. See Branson Sch. Dist. RE-82 v. Romer,
161 F.3d 619, 628–30 (10th Cir. 1998). The Second and
Fifth Circuits, by contrast, have not treated it as a standing
issue, but have also barred due process claims and allowed
Supremacy Clause challenges. E.g., Tweed-New Haven
Airport Auth. v. Tong, 930 F.3d 65, 72–73 (2d Cir. 2019)
(allowing a political subdivision to pursue a Supremacy
Clause claim); Rogers, 588 F.2d at 1069–71 (same); see also
Star-Kist Foods, Inc. v. County of Los Angeles, 42 Cal.3d 1,
6–10 (1986) (rejecting South Lake Tahoe’s per se “standing”
12 CITY OF SAN JUAN CAPISTRANO V. CPUC
bar and allowing a claim under the Commerce Clause). And
the Second, Fifth, and Tenth Circuit approaches remain
faithful to the driving force behind our rule—the unique
relationship between state subdivisions and their creating
states. E.g., Rogers, 588 F.2d at 1070.
The Supreme Court has barred due process and contract
clause claims by political subdivisions against states in
federal court. City of Trenton v. State of New Jersey,
262 U.S. 182, 188 (1923) (“The power of the State,
unrestrained by the contract clause or the Fourteenth
Amendment, over the rights and property of cities held and
used for ‘governmental purposes’ cannot be questioned.”)
(citation omitted). But the Supreme Court has not yet
addressed a claim under the Supremacy Clause and thus, the
split between our court and our sister courts has not been
resolved. The Supreme Court recently suggested that all
claims by political subdivisions are barred, noting that
“[p]olitical subdivisions of States—counties, cities, or
whatever—never were and never have been considered as
sovereign entities.” Ysursa v. Pocatello Educ. Ass’n,
555 U.S. 353, 362 (2009). The Court then compared
“political subdivision[s]” to “private corporation[s],” noting
that a corporation “enjoys constitutional protections” while
a political subdivision “has no privileges or immunities
under the federal constitution which it may invoke in
opposition to the will of its creator.” Id. at 362–63 (internal
quotations omitted).
Given the differing theories advanced by other courts
and the significant change in the meaning of “standing”
since we decided South Lake Tahoe, it is worth this court’s
consideration to revisit our rationale for our per se rule
(which would have to occur en banc) to decide whether we
remain on the correct path. At least three of our colleagues
CITY OF SAN JUAN CAPISTRANO V. CPUC 13
have previously suggested such a course. See Burbank-
Glendale-Pasadena Airport Auth. v. City of Burbank,
136 F.3d 1360, 1365 (9th Cir. 1998) (Kozinksi, J.,
concurring); Palomar, 180 F.3d at 1109, 1111 (Hawkins, J.,
concurring); Indian Oasis I, 91 F.3d at 1246, 1250(Reinhardt, J., dissenting). To be clear, this case does not
warrant en banc review because all circuit courts and the
Supreme Court bar due process claims. Trenton, 262 U.S.
at 188; see also supra at 6 n.2.
Consistent with the Supreme Court’s recent direction in
Ysursa, it may well be that our per se rule, even as an outlier
among the circuit courts, is the correct one. But the
underlying rationale still matters. Whether the rule is
properly understood as a per se bar on “standing” may not
be just a theoretical discussion but could have different
implications based on different constitutional provisions.
An inquiry informed by the type of constitutional claim at
issue and how that claim affects the state-political
subdivision relationship may provide a basis for allowing
suits based on certain constitutional provisions while
disallowing others. Branson, 161 F.3d at 628–29. But our
current per se standing rule, while providing the benefit of a
clear bright line, does not permit full consideration of
important constitutional questions in future cases.
Therefore, in the appropriate case, we should revisit en banc
whether our per se standing bar is correct.