American Trucking Associations v. Los Angeles

Federal law preempts the employment provision of the Port of Los Angeles concessions agreements with drayage truck carriers because the law interferes with third party employment relationships.

In response to community opposition and litigation by environmental groups, the Port of Los Angeles (“the Port”) began prohibiting motor carriers from operating drayage trucks on Port property unless they entered into “concession agreements.” The agreements were adopted as part of the Port’s “Clean Truck Program” setting forth specific requirements involving employment, maintenance, parking, and security. The American Trucking Association challenged the agreements arguing the Federal Aviation Administration Authorization Act (“FAAA”) preempts five provisions. The district court dismissed, finding no preemption. The Ninth Circuit affirmed the district court’s ruling that the financial capability, maintenance, and off-street parking provisions were not preempted. Similarly the Court affirmed that the placard provision was not preempted, despite the FAAA’s § 406(a) prohibition against states requiring motor carriers to display forms of identification. The Court reasoned that the Port was acting as a market participant because the provision only affects operation on Port premises. The Court found the employee-driver provision, requiring all concessionaries to employ licensed motor carries was preempted because the provision would impact third party behavior unrelated to the obligation owed to the Port and therefore fell outside the market participant doctrine. Furthermore, the Port’s interest in “streamlined administration” of the environmental provisions does not outweigh the interference with employment agreements between motor carriers and their drivers. AFFIRMED in part and REVERSED in part.