Calop Business Systems, Inc. v. City of Los Angeles

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS FILED
FOR THE NINTH CIRCUIT JUN 02 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
CALOP BUSINESS SYSTEMS, INC., No. 13-56992
Plaintiff - Appellant, D.C. No. 2:12-cv-07542-MMM-
RZ
v.
CITY OF LOS ANGELES, MEMORANDUM*
Defendant - Appellee.
Appeal from the United States District Court
for the Central District of California
Margaret M. Morrow, District Judge, Presiding
Argued and Submitted May 6, 2015
Pasadena, California
Before: NOONAN, WARDLAW, and MURGUIA, Circuit Judges.
The City of Los Angeles’s Living Wage Ordinance (“LWO”), L.A. Admin.
Code §§ 10.37–10.37.14, requires contractors who operate at the City’s airports to
pay their employees $14.80 per hour, or $10.30 per hour if the contractor provides
health benefits. L.A. Admin. Code § 10.37.2(a). The City’s Office of Contract
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Compliance found that Calop Business Systems, Inc., violated the LWO over a
twelve-day period in January 2010, in which Calop paid its employees only $11.55
per hour and made no health benefit contributions. Calop filed suit against the
City, asserting that the LWO is unconstitutionally vague in violation of the due
process guarantees of the United States and California Constitutions. Calop also
contends that the LWO is preempted by three federal statutes: the Employee
Retirement Income Security Act (“ERISA”),1 the Airline Deregulation Act,2 and
the Railway Labor Act.3 The district court granted summary judgment for the City
on all of Calop’s claims. We have jurisdiction under 28 U.S.C. § 1291, and affirm
in part and dismiss in part.
I
The district court correctly held that Calop lacks standing to argue that the
phrase “health benefits” is unconstitutionally vague. Calop paid its employees
$11.55 per hour without paying any health benefits at all, and therefore engaged in
“‘conduct that is clearly proscribed’” by the LWO. See Hunt v. City of L.A., 638
F.3d 703, 710 (9th Cir. 2011) (quoting Holder v. Humanitarian Law Project, 561
1
29 U.S.C. §§ 1001–1461.
2
Pub. L. 95-504, 92 Stat. 1705 (1978) (codified as amended in scattered
sections of 49 U.S.C.).
3
45 U.S.C. §§ 151-188.
2
U.S. 1, 20 (2010)).
The district court also correctly held that Calop lacks standing to attack the
LWO’s supersession provision, which allows employers and unions to opt out of
the LWO’s minimum wage in a collective bargaining agreement. L.A. Admin.
Code § 10.37.12. As the district court observed, because Calop has not shown that
the City ever attempted to enforce that provision against it, Calop cannot show that
it suffered an injury as a result of the LWO’s supersession clause. In addition, the
higher overtime rate that the LWO imposes on employers who do not pay health
benefits does not confer standing on Calop because it is “fairly traceable” to the
City’s interpretation of the LWO’s minimum wage term, not to any ambiguity in
the minimum wage and supersession provisions. See Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560–61 (1992). Calop therefore has not demonstrated that
it has standing to argue that the minimum wage and supersession terms are
unconstitutionally vague. See id.
We dismiss for lack of jurisdiction Calop’s claim that the LWO is
unconstitutionally vague.
II
ERISA preempts any state law that “has a connection with or a reference to”
an employee benefits plan. Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983).
3
The district court properly held that the LWO does not fulfill either condition of
ERISA preemption. First, the LWO does not have a “reference to” employee
benefits plans merely because it takes into account what health benefits employers
offer in “calculating the cash wage that must be paid.” See WSB Elec., Inc. v.
Curry, 88 F.3d 788, 793–94 (9th Cir. 1996). Second, the LWO’s provision for
collecting reports on employee compensation from employers does not create a
“connection with” employee benefits plans because the provision imposes no
obligations on plans themselves. See id. at 794–96. Third, the LWO does not give
rise to a “connection with” benefits plans merely by creating economic incentives
to offer certain kinds of benefits, again because it imposes no affirmative
obligation with respect to those plans. See id. at 795–96.4
III
The district court correctly granted summary judgment for the City on
Calop’s claim that the Airline Deregulation Act preempts the LWO. Because
Calop has produced no evidence that the LWO affects any airline’s “price, route,
4
Calop argues that ERISA preempts a provision of the LWO that prohibits
employees from waiving their employers’ health coverage under certain
circumstances. See L.A. Admin. Code § 10.37.3(a). Calop lacks standing to
challenge this provision because it has not shown that it offers a benefits plan, and
therefore cannot show that the provision caused it any concrete injury. See Lujan,
504 U.S. at 560. To the extent that Calop argues that ERISA preempts the LWO’s
no-waiver provision, we dismiss the claim for lack of jurisdiction.
4
or service,” see 49 U.S.C. § 41713(b)(1); Air Transp. Ass’n v. City & Cnty. of S.F.,
266 F.3d 1064, 1072 (9th Cir. 2001), Calop has not demonstrated that the LWO
“acutely interfer[es] with the forces of competition” in the airline industry, see
Californians for Safe & Competitive Dump Truck Transp. v. Mendonca, 152 F.3d
1184, 1189 (9th Cir. 1998).
IV
Finally, the district court correctly granted summary judgment for the City
on Calop’s claim that the LWO is preempted by the Railway Labor Act. The Act
does not preempt state and local laws that, like the LWO, impose minimum
substantive requirements while permitting employers and unions to bargain around
them. See Firestone v. S. Cal. Gas. Co., 219 F.3d 1063, 1067–68 (9th Cir. 2000).5
~
Calop’s claim that the LWO is unconstitutionally vague, and its ERISA
preemption claim to the extent it attacks section 10.37.3(a) of the Los Angeles
Administrative Code, are DISMISSED for lack of jurisdiction. In all other
respects, the judgment of the district court is AFFIRMED.
5
Firestone held that a state labor regulation that permitted employers and
unions to opt out was not preempted by either the Labor Management Relations
Act or the National Labor Relations Act. See 219 F.3d at 1067–68. Opinions
addressing preemption by these statutes also bear on preemption by the Railway
Labor Act. See Air Transp., 266 F.3d at 1075–76.
5