1 (Slip Opinion) OCTOBER TERM, 2004 Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is being done in connection with this case, at
the time the opinion is issued. The syllabus constitutes no part of the opinion of the Court but has been prepared by
the Reporter of Decisions for the convenience of the reader. See United States v. Detroit Timber & Lumber Co., 200
U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
LINGLE, GOVERNOR OF HAWAII, ET AL. v. CHEVRON
U. S. A. INC.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT
No. 04–163. Argued February 22, 2005—Decided May 23, 2005
Concerned about the effects of market concentration on retail gasoline prices, the Hawaii Legislature
passed Act 257, which limits the rent oil companies may charge dealers leasing company-owned
service stations. Respondent Chevron U. S. A. Inc., then one of the largest oil companies in Hawaii,
brought this suit seeking a declaration that the rent cap effected an unconstitutional taking of its
property and an injunction against application of the cap to its stations. Applying Agins v. City of
Tiburon, 447 U. S. 255, 260—where this Court declared that government regulation of private
property “effects a taking if [it] does not substantially advance legitimate state interests”— the
District Court held that the rent cap effects an uncompensated taking in violation of the Fifth and
Fourteenth Amendments because it does not substantially advance Hawaii’s asserted interest in controlling retail gas prices. The Ninth Circuit affirmed.
Held: Agins’ “substantially advance[s]” formula is not an appropriate test for determining whether a
regulation effects a Fifth Amendment taking. Pp. 6–19.
(a) The paradigmatic taking requiring just compensation is a direct government appropriation
or physical invasion of private property. See, e.g., United States v. Pewee Coal Co., 341 U. S. 114.
Beginning with Pennsylvania Coal Co. v. Mahon, 260 U. S. 393, however, the Court recognized that
government regulation of private property may be so onerous that its effect is tantamount to a direct
appropriation or ouster. Regulatory actions generally will be deemed per se takings for Fifth
Amendment purposes (1) where government requires an owner to suffer a permanent physical invasion
of her property, see Loretto v. Teleprompter Manhattan CATV Corp., 458 U. S. 419, or (2)
2 LINGLE v. CHEVRON U. S. A. INC. Syllabus
where regulations completely deprive an owner of “all economicallybeneficial us[e]” of her
property, Lucas v. South Carolina Coastal Council, 505 U. S. 1003, 1019. Outside these two categories
(and the special context of land-use exactions discussed below), regulatory takings challenges are
governed by Penn Central Transportation Co. v. New York City, 438 U. S. 104, 124. Penn Central
identified several factors—including the regulation’s economic impact on the claimant, the extent to
which it interferes with distinct investment-backed expectations, and the character of the government
action—that are particularly significant in determining whether a regulation effects a taking. Because
the three inquiries reflected in Loretto, Lucas, and Penn Central all aim to identify regulatory actions
that are functionally equivalent to a direct appropriation of or ouster from private property, each of
them focuses upon the severity of the burden that government imposes upon property rights. Pp. 6–10.
(b) The “substantially advances” formula is not a valid method of identifying compensable
regulatory takings. It prescribes an inquiry in the nature of a due process test, which has no proper
place in the Court’s takings jurisprudence. The formula unquestionably was derived from due process
precedents, since Agins supported it with citations to Nectow v. Cambridge, 277 U. S. 183, 185, and
Village of Euclid v. Ambler Realty Co., 272 U. S. 365, 395. Although Agins’ reliance on those precedents
is understandable when viewed in historical context, the language the Court selected was imprecise. It
suggests a means-ends test, asking, in essence, whether a regulation of private property is effective in
achieving some legitimate public purpose. Such an inquiry is not a valid method of discerning whether
private property has been “taken” for Fifth Amendment purposes. In stark contrast to the three
regulatory takings tests discussed above, the “substantially advances” inquiry reveals nothing about
the magnitude or character of the burden a particular regulation imposes upon private property rights
or how any regulatory burden is distributed among property owners. Thus, this test does not help to
identify those regulations whose effects are functionally comparable to government appropriation or
invasion of private property; it is tethered neither to the text of the Takings Clause nor to the basic
justification for allowing regulatory actions to be challenged under the Clause. Moreover, the Agins
formula’s application as a takings test would present serious practical difficulties. Reading it to
demand heightened means-ends review of virtually all regulation of private property would require
courts to scrutinize the efficacy of a vast array of state and federal regulations—a task for which they
are not well suited. It would also empower—and might often require—courts to substitute their
predictive judgments for those of elected legislatures and expert
3 Cite as: 544 U. S. ____ (2005)
Syllabus
agencies. Pp. 10–15.
(c) The Court’s holding here does not require it to disturb any of its prior holdings. Although it
applied a “substantially advances” inquiry in Agins itself, see 447 U. S., at 261–262, and arguably in
Keystone Bituminous Coal Assn. v. DeBenedictis, 480 U. S. 470, 485–492, it has never found a
compensable taking based on such an inquiry. Moreover, in most of the cases reciting the Agins
formula, the Court has merely assumed its validity when referring to it in dicta. See, e.g., Tahoe-Sierra
Preservation Council, Inc. v. Tahoe Regional Planning Agency, 535 U. S. 302, 334. Although Nollan v.
California Coastal Commission, 483 U. S. 825, 834, and Dolan v. City of Tigard, 512 U. S. 374, 385,
drew upon Agins’ language, the rule those cases established is entirely distinct from the “substantially
advances” test: They involved a special application of the “doctrine of unconstitutional conditions,”
which provides that the government may not require a person to give up the constitutional right to
receive just compensation when property is taken for a public use in exchange for a discretionary
benefit that has little or no relationship to the property. Ibid. Pp. 16–18.
(d) A plaintiff seeking to challenge a government regulation as an uncompensated taking of
private property may proceed by alleging a “physical” taking, a Lucas-type total regulatory taking, a
Penn Central taking, or a land-use exaction violating the Nollan and Dolan standards. Because
Chevron argued only a “substantially advances” theory, it was not entitled to summary judgment on its
takings claim. Pp. 18–19.
363 F. 3d 846, reversed and remanded.
O’CONNOR, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion.
_________________ _________________ 1 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the preliminary print of the United States
Reports. Readers are requested to notify the Reporter of Decisions, Supreme Court of the United States, Washington,
D. C. 20543, of any typographical or other formal errors, in order that corrections may be made before the preliminary
print goes to press.
SUPREME COURT OF THE UNITED STATES
No. 04–163
LINDA LINGLE, GOVERNOR OF HAWAII, ET AL., PETITIONERS v. CHEVRON
U. S. A. INC.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
[May 23, 2005]
JUSTICE O’CONNOR delivered the opinion of the Court.
On occasion, a would-be doctrinal rule or test finds its way into our case law
through simple repetition of a phrase—however fortuitously coined. A quarter
century ago, in Agins v. City of Tiburon, 447 U. S. 255 (1980), the Court declared
that government regulation of private property “effects a taking if [such regulation]
does not substantially advance legitimate state interests . . . .” Id., at 260. Through
reiteration in a half dozen or so decisions since Agins, this language has been
ensconced in our Fifth Amendment takings jurisprudence. See Monterey v. Del
Monte Dunes at Monterey, Ltd., 526 U. S. 687, 704 (1999) (citing cases).
In the case before us, the lower courts applied Agins’ “substantially advances”
formula to strike down a Hawaii statute that limits the rent that oil companies may
charge to dealers who lease service stations owned by the companies. The lower
courts held that the rent cap effects an uncompensated taking of private property in
violation of the Fifth and Fourteenth Amendments because it does not substantially
advance
Hawaii’s
asserted
interest
in
con
2 LINGLE v. CHEVRON U. S. A. INC. Opinion of the Court
trolling retail gasoline prices. This case requires us to decide whether the
“substantially advances” formulaannounced in Agins is an appropriate test for
determining whether a regulation effects a Fifth Amendment taking. We conclude
that it is not.
I The State of Hawaii, whose territory comprises an
archipelago of 132 islands clustered in the midst of the Pacific Ocean, is located
over 1,600 miles from the U. S. mainland and ranks among the least populous of
the 50 States. Because of Hawaii’s small size and geographic isolation, its
wholesale market for oil products is highly concentrated. When this lawsuit
began in 1997, only two refineries and six gasoline wholesalers were doing business in the State. As of that time, respondent Chevron
U. S. A. Inc. was the largest refiner and marketer of gasoline in Hawaii: It controlled
60 percent of the market for gasoline produced or refined in-state and 30 percent of
the wholesale market on the State’s most populous island, Oahu.
Gasoline is sold at retail in Hawaii from about 300 different service stations.
About half of these stations are leased from oil companies by independent lesseedealers, another 75 or so are owned and operated by “open” dealers, and the
remainder are owned and operated by the oil companies. Chevron sells most of its
product through 64 independent lessee-dealer stations. In a typical lessee-dealer
arrangement, Chevron buys or leases land from a third party, builds a service
station, and then leases the station to a dealer on a turnkey basis. Chevron
chargesthe lessee-dealer a monthly rent, defined as a percentage of the dealer’s
margin on retail sales of gasoline and other goods. In addition, Chevron requires the
lessee-dealer to enter into a supply contract, under which the dealer agrees to
purchase
from
Chevron
whatever
is
necessary
to
3 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
satisfy demand at the station for Chevron’s product. Chevron unilaterally sets the
wholesale price of its product.
The Hawaii Legislature enacted Act 257 in June 1997, apparently in response to
concerns about the effects ofmarket concentration on retail gasoline prices. See 1997
Haw. Sess. Laws no. 257, §1. The statute seeks to protectindependent dealers by
imposing certain restrictions onthe ownership and leasing of service stations by oil
companies. It prohibits oil companies from converting existing lessee-dealer stations
to company-operated stations and from locating new company-operated stations in
close proximity to existing dealer-operated stations. Haw. Rev. Stat. §§486H–10.4(a),
(b) (1998 Cum. Supp.). More importantly for present purposes, Act 257 limits the
amount of rent that an oil company may charge a lessee-dealer to 15 percent of the
dealer’s gross profits from gasoline sales plus 15 percent of gross sales of products
other than gasoline. §486H–10.4(c).
Thirty days after Act 257’s enactment, Chevron sued the Governor and Attorney
General of Hawaii in their official capacities (collectively Hawaii) in the United
States District Court for the District of Hawaii, raising several federal constitutional
challenges to the statute. As pertinenthere, Chevron claimed that the statute’s rent
cap provision, on its face, effected a taking of Chevron’s property in violation of the
Fifth and Fourteenth Amendments. Chevron sought a declaration to this effect as
well as an injunction against the application of the rent cap to its stations. Chevron
swiftly moved for summary judgment on its takings claim, arguing that the rent cap
does not substantially advance any legitimate government interest. Hawaii filed a
cross-motion for summary judgment on all of Chevron’s claims.
To facilitate resolution of the summary judgment motions, the parties jointly
stipulated to certain relevant facts. They agreed that Act 257 reduces by about
4 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
$207,000 per year the aggregate rent that Chevron would otherwise charge on 11 of
its 64 lessee-dealer stations. On the other hand, the statute allows Chevron to collect
more rent than it would otherwise charge at its remaining 53 lessee-dealer stations,
such that Chevron could increase its overall rental income from all 64 stations by
nearly $1.1 million per year. The parties further stipulated that,over the past 20
years, Chevron has not fully recovered the costs of maintaining lessee-dealer
stations in any State through rent alone. Rather, the company recoups itsexpenses
through a combination of rent and product sales. Finally, the joint stipulation states
that Chevron has earned in the past, and anticipates that it will continue to earn
under Act 257, a return on its investment in lessee-dealer stations in Hawaii that
satisfies any constitutionalstandard.
The District Court granted summary judgment to Chevron, holding that “Act 257
fails to substantially advance a legitimate state interest, and as such, effects an
unconstitutional taking in violation of the Fifth and Fourteenth Amendments.”
Chevron U. S. A. Inc. v. Cayetano, 57 F. Supp. 2d 1003, 1014 (1998). The District
Court accepted Hawaii’s argument that the rent cap was intended to prevent
concentration of the retail gasoline market— and, more importantly, resultant high
prices for consum-ers—by maintaining the viability of independent lessee-dealers.
Id., at 1009–1010. The court concluded that the statute would not substantially
advance this interest, however, because it would not actually reduce lessee-dealers’
costs or retail prices. It found that the rent capwould allow incumbent lesseedealers, upon transferringoccupancy rights to a new lessee, to charge the
incominglessee a premium reflecting the value of the rent reduction. Accordingly,
the District Court reasoned, the incoming lessee’s overall expenses would be the
same as in the absence of the rent cap, so there would be no savings to
5 Cite as: 544 U. S. ____ (2005) Opinion of the Court
pass along to consumers. Id., at 1010–1012. Nor would incumbent lessees benefit
from the rent cap, the court found, because the oil company lessors would
unilaterally raise wholesale fuel prices in order to offset the reduction in their rental
income. Id., at 1012–1014.
On appeal, a divided panel of the Court of Appeals for the Ninth Circuit held that
the District Court had applied the correct legal standard to Chevron’s takings claim.
Chevron U. S. A. Inc. v. Cayetano, 224 F. 3d 1030, 1033– 1037 (2000). The Court of
Appeals vacated the grant of summary judgment, however, on the ground that a
genuine issue of material fact remained as to whether the Act would benefit
consumers. Id., at 1037–1042. Judge William Fletcher concurred in the judgment,
maintaining that the “reasonableness” standard applicable to “ordinary rent and
price control laws” should instead govern Chevron’s claim. Id., at 1048.
On remand, the District Court entered judgment for Chevron after a 1-day bench
trial in which Chevron and Hawaii called competing expert witnesses (both economists) to testify. 198 F. Supp. 2d 1182 (2002). FindingChevron’s expert witness to be
“more persuasive” than the State’s expert, the District Court once again
concludedthat oil companies would raise wholesale gasoline prices to offset any rent
reduction required by Act 257, and that the result would be an increase in retail
gasoline prices. Id., at 1187–1189. Even if the rent cap did reduce lessee-dealers’
costs, the court found, they would not pass on anysavings to consumers. Id., at 1189.
The court went on to reiterate its determination that Act 257 would enable
incumbent lessee-dealers to sell their leaseholds at a premium, such that incoming
lessees would not obtain anyof the benefits of the rent cap. Id., at 1189–1190. And
while it acknowledged that the rent cap could preclude oilcompanies from
constructively evicting dealers through excessive rents, the court found no evidence
that
Chevron
6 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
or any other oil company would attempt to charge such rents in the absence of the
cap. Id., at 1191. Finally, thecourt concluded that Act 257 would in fact decrease the
number of lessee-dealer stations because the rent cap would discourage oil
companies from building such stations. Id., at 1191–1192. Based on these findings,
theDistrict Court held that “Act 257 effect[ed] an unconstitutional regulatory taking
given its failure to substantially advance any legitimate state interest.” Id., at 1193.
The Ninth Circuit affirmed, holding that its decision in the prior appeal barred
Hawaii from challenging the application of the “substantially advances” test to
Chev-ron’s takings claim or from arguing for a more deferential standard of review.
363 F. 3d 846, 849–855 (2004). The panel majority went on to reject Hawaii’s
challenge to the application of the standard to the facts of the case. Id., at 855–858.
Judge Fletcher dissented, renewing his contention that Act 257 should not be
reviewed under the “substantially advances” standard. Id., at 859–861. We granted
certiorari, 543 U. S. ___ (2004), and now reverse.
II A
The Takings Clause of the Fifth Amendment, made applicable to the States
through the Fourteenth, see Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226 (1897),
provides that private property shall not “be taken for public use, without just
compensation.” As its text makes plain, the Takings Clause “does not prohibit the
taking of private property, but instead places a condition on the exercise of that
power.” First English Evangelical Lutheran Church of Glendale v. County of Los
Angeles, 482 U. S. 304, 314 (1987). In other words, it “is designed not to limit the
governmental interference with property rights per se, but rather to secure
compensation in the event of otherwise proper interference amounting to a
7 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
taking.” Id., at 315 (emphasis in original). While scholars have offered various
justifications for this regime, we have emphasized its role in “bar[ring] Government
from forcing some people alone to bear public burdens which, in all fairness and
justice, should be borne by the public as a whole.” Armstrong v. United States, 364
U. S. 40, 49 (1960); see also Monongahela Nav. Co. v. United States, 148 U. S. 312,
325 (1893).
The paradigmatic taking requiring just compensation is a direct government
appropriation or physical invasion of private property. See, e.g., United States v.
Pewee Coal Co., 341 U. S. 114 (1951) (Government’s seizure and operation of a coal
mine to prevent a national strike of coal miners effected a taking); United States v.
General Motors Corp., 323 U. S. 373 (1945) (Government’s occupation of private
warehouse effected a taking). Indeed, until the Court’s watershed decision in
Pennsylvania Coal Co. v. Mahon, 260 U. S. 393 (1922), “it was generally thought
that the Takings Clause reached only a ‘direct appropriation’ of property, or the
functional equivalent of a ‘practical ouster of [the owner’s] possession.’ ” Lucas v.
South Carolina Coastal Council, 505 U. S. 1003, 1014 (1992)(citations omitted and
emphasis added; brackets in original); see also id., at 1028, n. 15 (“[E]arly
constitutional theorists did not believe the Takings Clause embraced regulations of
property at all”).
Beginning with Mahon, however, the Court recognizedthat government regulation
of private property may, in some instances, be so onerous that its effect is
tantamount to a direct appropriation or ouster—and that such “regulatory takings”
may be compensable under the Fifth Amendment. In Justice Holmes’ storied but
cryptic formulation, “while property may be regulated to a certain extent, if
regulation goes too far it will be recognized as a taking.”260 U. S., at 415. The rub, of
course, has been—and re-mains—how to discern how far is “too far.” In answering
8 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
that question, we must remain cognizant that “government regulation—by
definition—involves the adjustment of rights for the public good,” Andrus v. Allard,
444 U. S. 51, 65 (1979), and that “Government hardly could go on if to some extent
values incident to property could not be diminished without paying for every such
change in the general law,” Mahon, supra, at 413.
Our precedents stake out two categories of regulatory action that generally will be
deemed per se takings for Fifth Amendment purposes. First, where government
requires an owner to suffer a permanent physical invasion of her property—however
minor—it must provide just compensation. See Loretto v. Teleprompter Manhattan
CATV Corp., 458 U. S. 419 (1982) (state law requiring landlords to permit cable
companies to install cable facilities in apartment buildings effected a taking). A
second categorical rule applies to regulations that completely deprive an owner of
“all economically beneficial us[e]” of her property. Lucas, 505 U. S., at 1019
(emphasis in original). We held in Lucas that the government must pay just
compensation for such “total regulatory takings,” except to the extent that
“background principles of nuisance and property law” independently restrict the
owner’s intended use of the property. Id., at 1026–1032.
Outside these two relatively narrow categories (and the special context of land-use
exactions discussed below, see infra, at 16–18), regulatory takings challenges are
governed by the standards set forth in Penn Central Transp. Co. v. New York City,
438 U. S. 104 (1978). The Court in Penn Central acknowledged that it had hitherto
been “unable to develop any ‘set formula’ ” for evaluating regulatory takings claims,
but identified “several factors thathave particular significance.” Id., at 124. Primary
among those factors are “[t]he economic impact of the regulation on the claimant
and, particularly, the extent to which the regulation has interfered with distinct
investment-backed
9 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
expectations.” Ibid. In addition, the “character of the governmental action”—for
instance whether it amounts to a physical invasion or instead merely affects
property interests through “some public program adjusting the benefits and burdens
of economic life to promote the common good”—may be relevant in discerning
whether a taking has occurred. Ibid. The Penn Central factors— though each has
given rise to vexing subsidiary ques-tions—have served as the principal guidelines
for resolving regulatory takings claims that do not fall within the physical takings or
Lucas rules. See, e.g., Palazzolo v. Rhode Island, 533 U. S. 606, 617–618 (2001); id.,
at 632– 634 (O’CONNOR, J., concurring).
Although our regulatory takings jurisprudence cannot be characterized as unified,
these three inquiries (reflected in Loretto, Lucas, and Penn Central) share a
commontouchstone. Each aims to identify regulatory actions that are functionally
equivalent to the classic taking in which government directly appropriates private
property or ousts the owner from his domain. Accordingly, each of these tests focuses
directly upon the severity of the burden that government imposes upon private
property rights. The Court has held that physical takings require compensation
because of the unique burden they impose: A permanent physical invasion, however
minimal the economic cost it entails, eviscerates the owner’s right to exclude others
from entering and using her property—perhaps the most fundamental of all
property interests. See Dolan v. City of Tigard, 512 U. S. 374, 384 (1994); Nollan v.
California Coastal Comm’n, 483 U. S. 825, 831–832 (1987); Loretto, supra, at 433;
Kaiser Aetna v. United States, 444 U. S. 164, 176 (1979). In the Lucas context, of
course, the complete elimination of a property’s value is the determinative factor.
See Lucas, supra, at 1017 (positing that “total deprivation of beneficial use is, from
the landowner’s point of view, the equivalent of a physical appropriation”).
10 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
And the Penn Central inquiry turns in large part, albeit not exclusively, upon the
magnitude of a regulation’s economic impact and the degree to which it interferes
withlegitimate property interests.
B In Agins v. City of Tiburon, a case involving a facial
takings challenge to certain municipal zoning ordinances, the Court declared
that “[t]he application of a general zoning law to particular property effects a
taking if the ordinance does not substantially advance legitimate state interests,
see Nectow v. Cambridge, 277 U. S. 183, 188 (1928), or denies an owner
economically viable use of his land, see Penn Central Transp. Co. v. New York
City, 438
U. S. 104, 138, n. 36 (1978).” 447 U. S., at 260. Because this statement is phrased in
the disjunctive, Agins’ “substantially advances” language has been read to announce
a stand-alone regulatory takings test that is wholly independent of Penn Central or
any other test. Indeed, the lower courts in this case struck down Hawaii’s rent
control statute as an “unconstitutional regulatory taking,” 198 F. Supp. 2d, at 1193,
based solely upon a finding that it does not substantially advance the State’s
asserted interest in controlling retail gasoline prices. See supra, at 6–7. Although a
number of our takings precedents have recited the “substantially advances” formula
minted in Agins, this is our first opportunity to consider its validity as a freestanding takings test. We conclude that this formula prescribes an inquiry in the
nature of a due process, not a takings, test, and that it has no proper place in our
takings jurisprudence.
There is no question that the “substantially advances” formula was derived from
due process, not takings, precedents. In support of this new language, Agins cited
Nectow v. Cambridge, 277 U. S. 183, a 1928 case in which the plaintiff claimed that
a
city
zoning
ordinance
“deprived
11 Cite as: 544 U. S. ____ (2005) Opinion of the Court
him of his property without due process of law in contravention of the Fourteenth
Amendment,” id., at 185. Agins then went on to discuss Village of Euclid v. Ambler
Realty Co., 272 U. S. 365 (1926), a historic decision holding that amunicipal zoning
ordinance would survive a substantive due process challenge so long as it was not
“clearly arbitrary and unreasonable, having no substantial relation to the public
health, safety, morals, or general welfare.” Id., at 395 (emphasis added); see also
Nectow, supra, at 188 (quoting the same “substantial relation” language from
Euclid).
When viewed in historical context, the Court’s reliance on Nectow and Euclid is
understandable. Agins was the Court’s first case involving a challenge to zoning
regulations in many decades, so it was natural to turn to these seminal zoning
precedents for guidance. See Brief for United States as Amicus Curiae in Agins v.
City of Tiburon, O. T. 1979, No. 602, pp. 12–13 (arguing that Euclid “set out the
principles applicable to a determination of thefacial validity of a zoning ordinance
attacked as a violation of the Takings Clause of the Fifth Amendment”). Moreover,
Agins’ apparent commingling of due process and takings inquiries had some
precedent in the Court’s then-recent decision in Penn Central. See 438 U. S., at 127
(stating in dicta that “[i]t is . . . implicit in Goldblatt [v. Hempstead, 369 U. S. 590
(1962),] that a use restriction on real property may constitute a ‘taking’ if not
reasonably necessary to the effectuation of a substantial public purpose, see Nectow
v. Cambridge, supra”). But see Goldblatt, supra, at 594–595 (quoting “‘reasonably
necessary’ ” language from Lawton v. Steele, 152 U. S. 133, 137 (1894), a due process
case, and applying a deferential “ ‘reasonableness’ ” standard to determine whether
a challenged regulation was a “valid exercise of the . . . police power” under the Due
Process Clause). Finally, when Agins was decided, there had been some history of
referring
to
depri
12 LINGLE v. CHEVRON U. S. A. INC. Opinion of the Court
vations of property without due process of law as “takings,” see, e.g., Rowan v.
Post Office Dept., 397 U. S. 728, 740 (1970), and the Court had yet to clarify whether
“regulatory takings” claims were properly cognizable under the Takings Clause or
the Due Process Clause, see Williamson County Regional Planning Comm’n v.
Hamilton Bank of Jefferson City, 473 U. S. 172, 197–199 (1985).
Although Agins’ reliance on due process precedents is understandable, the
language the Court selected was regrettably imprecise. The “substantially advances”
formula suggests a means-ends test: It asks, in essence, whether a regulation of
private property is effective in achieving some legitimate public purpose. An inquiry
of this nature has some logic in the context of a due process challenge, for a
regulation that fails to serve any legitimate governmental objective may be so
arbitrary or irrational that it runs afoul of the Due Process Clause. See, e.g., County
of Sacramento v. Lewis, 523 U. S. 833, 846 (1998) (stating that the Due Process
Clause is intended, in part, to protect the individual against “the exercise of
powerwithout any reasonable justification in the service of a legitimate
governmental objective”). But such a test is not a valid method of discerning whether
private property has been “taken” for purposes of the Fifth Amendment.
In stark contrast to the three regulatory takings tests discussed above, the
“substantially advances” inquiry reveals nothing about the magnitude or character
of the burden a particular regulation imposes upon private property rights. Nor does
it provide any information about how any regulatory burden is distributed among
property owners. In consequence, this test does not help to identify those regulations
whose effects are functionally comparable to government appropriation or invasion
of privateproperty; it is tethered neither to the text of the Takings Clause nor to the
basic justification for allowing regulatory actions to be challenged under the Clause.
13 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
Chevron appeals to the general principle that the Takings Clause is meant “ ‘to
bar Government from forcing some people alone to bear public burdens which, in all
fairness and justice, should be borne by the public as a whole.’ ” Brief for Respondent
17–21 (quoting Armstrong, 364 U. S., at 49). But that appeal is clearly misplaced, for
the reasons just indicated. A test that tells us nothing about the actual burden
imposed on property rights, or how that burden is allocated cannot tell us when
justice might require that the burden be spread among taxpayers through the
payment of compensation. The owner of a property subject to a regulation that
effectively serves a legitimate state interest may be just as singled out and just as
burdened as the owner of a property subject to an ineffective regulation. It would
make little sense to saythat the second owner has suffered a taking while the first
has not. Likewise, an ineffective regulation may not significantly burden property
rights at all, and it may distribute any burden broadly and evenly among property
owners. The notion that such a regulation nevertheless “takes” private property for
public use merely by virtue of its ineffectiveness or foolishness is untenable.
Instead of addressing a challenged regulation’s effect on private property, the
“substantially advances” inquiry probes the regulation’s underlying validity. But
such an inquiry is logically prior to and distinct from the questionwhether a
regulation effects a taking, for the Takings Clause presupposes that the government
has acted in pursuit of a valid public purpose. The Clause expressly requires
compensation where government takes private property “for public use.” It does not
bar government frominterfering with property rights, but rather requires compensation “in the event of otherwise proper interference amounting to a taking.”
First English Evangelical Lutheran Church, 482 U. S., at 315 (emphasis added).
Conversely,
if
a
government
action
is
found
to
be
impermissi
14 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
ble—for instance because it fails to meet the “public use” requirement or is so
arbitrary as to violate due process— that is the end of the inquiry. No amount of
compensation can authorize such action.
Chevron’s challenge to the Hawaii statute in this case illustrates the flaws in the
“substantially advances” theory. To begin with, it is unclear how significantly
Hawaii’s rent cap actually burdens Chevron’s property rights. The parties stipulated
below that the cap would reduce Chev-ron’s aggregate rental income on 11 of its 64
lessee-dealer stations by about $207,000 per year, but that Chevron nevertheless
expects to receive a return on its investment in these stations that satisfies any
constitutional standard. See supra, at 4. Moreover, Chevron asserted below, and the
District Court found, that Chevron would recoup any reductions in its rental income
by raising wholesalegasoline prices. See supra, at 5. In short, Chevron has not
clearly argued—let alone established—that it has been singled out to bear any
particularly severe regulatory burden. Rather, the gravamen of Chevron’s claim is
simply that Hawaii’s rent cap will not actually serve the State’s legitimate interest
in protecting consumers against high gasoline prices. Whatever the merits of that
claim, it does not sound under the Takings Clause. Chevron plainly does not seek
compensation for a taking of its property for a legitimate public use, but rather an
injunction against the enforcement of a regulation that it allegesto be fundamentally
arbitrary and irrational.
Finally, the “substantially advances” formula is not only doctrinally untenable as
a takings test—its application as such would also present serious practical
difficulties. The Agins formula can be read to demand heightened means-ends
review of virtually any regulation of private property. If so interpreted, it would
require courts to scrutinize the efficacy of a vast array of state and federal
regulations—a task for which courts are not well suited. Moreover, it
15 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
would empower—and might often require—courts to substitute their predictive
judgments for those of elected legislatures and expert agencies.
Although the instant case is only the tip of the proverbial iceberg, it foreshadows
the hazards of placing courts in this role. To resolve Chevron’s takings claim, the
District Court was required to choose between the views oftwo opposing economists
as to whether Hawaii’s rent control statute would help to prevent concentration and
supracompetitive prices in the State’s retail gasoline market. Finding one expert to
be “more persuasive” than the other, the court concluded that the Hawaii Legislature’s chosen regulatory strategy would not actually achieve its objectives. See 198
F. Supp. 2d, at 1187–1193. Along the way, the court determined that the State
wasnot entitled to enact a prophylactic rent cap without actual evidence that oil
companies had charged, or would charge, excessive rents. See id., at 1191. Based on
these findings, the District Court enjoined further enforcement of Act 257’s rent cap
provision against Chevron. We find the proceedings below remarkable, to say the
least, given that we have long eschewed such heightened scrutiny when addressing
substantive due process challenges to government regulation. See, e.g., Exxon Corp.
v. Governor of Maryland, 437 U. S. 117, 124–125 (1978); Ferguson v. Skrupa, 372 U.
S. 726, 730–732 (1963). The reasons for deference to legislative judgments about the
need for, and likely effectiveness of, regulatory actions are by now well established,
and we think they are no less applicable here.
For the foregoing reasons, we conclude that the “substantially advances” formula
announced in Agins is not a valid method of identifying regulatory takings for which
the Fifth Amendment requires just compensation. Since Chevron argued only a
“substantially advances” theory insupport of its takings claim, it was not entitled to
summary
judgment
on
that
claim.
16
LINGLE v. CHEVRON U. S. A. INC. Opinion of the CourtIII
We emphasize that our holding today—that the “substantially advances” formula
is not a valid takings test— does not require us to disturb any of our prior holdings.
To be sure, we applied a “substantially advances” inquiry in Agins itself, see 447 U.
S., at 261–262 (finding that the challenged zoning ordinances “substantially
advance[d] legitimate governmental goals”), and arguably also in Keystone
Bituminous Coal Assn. v. DeBenedictis, 480 U. S. 470, 485–492 (1987) (quoting “
‘substantially advance[s]’ ” language and then finding that the challenged statute
was intended to further a substantial public interest). But in no case have we found
a compensable taking based onsuch an inquiry. Indeed, in most of the cases reciting
the“substantially advances” formula, the Court has merely assumed its validity
when referring to it in dicta. See Tahoe-Sierra Preservation Council, Inc. v. Tahoe
Regional Planning Agency, 535 U. S. 302, 334 (2002); Del Monte Dunes, 526 U. S., at
704; Lucas, 505 U. S., at 1016; Yee v. Escondido, 503 U. S. 519, 534 (1992); United
States v. Riverside Bayview Homes, Inc., 474 U. S. 121, 126 (1985).
It might be argued that this formula played a role in our decisions in Nollan v.
California Coastal Comm’n, 483
U. S. 825 (1987), and Dolan v. City of Tigard, 512 U. S. 374 (1994). See Brief for
Respondent 21–23. But while the Court drew upon the language of Agins in these
cases, it did not apply the “substantially advances” test that is the subject of today’s
decision. Both Nollan and Dolan involved Fifth Amendment takings challenges to
adjudicative land-use exactions—specifically, government demands that a
landowner dedicate an easement allowing publicaccess to her property as a condition
of obtaining a development permit. See Dolan, supra, at 379–380 (permit toexpand a
store and parking lot conditioned on the dedication of a portion of the relevant
property for a “greenway,” including a bike/pedestrian path); Nollan, supra, at 828
17 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
(permit to build a larger residence on beachfront property conditioned on dedication
of an easement allowing the public to traverse a strip of the property between the
owner’s seawall and the mean high-tide line).
In each case, the Court began with the premise that, had the government simply
appropriated the easement in question, this would have been a per se physical
taking. Dolan, supra, at 384; Nollan, supra, at 831–832. The question was whether
the government could, without paying the compensation that would otherwise be
requiredupon effecting such a taking, demand the easement as a condition for
granting a development permit the government was entitled to deny. The Court in
Nolan answered in the affirmative, provided that the exaction would substantially
advance the same government interest thatwould furnish a valid ground for denial
of the permit. 483 U. S., at 834–837. The Court further refined this requirement in
Dolan, holding that an adjudicative exaction requiring dedication of private property
must also be “ ‘rough[ly] proportiona[l]’ . . . both in nature and extent to the impact
of the proposed development.” 512 U. S., at 391; see also Del Monte Dunes, supra, at
702 (emphasizingthat we have not extended this standard “beyond thespecial
context of [such] exactions”).
Although Nollan and Dolan quoted Agins’ language, see Dolan, supra, at 385;
Nollan, supra, at 834, the rule those decisions established is entirely distinct from
the “substantially advances” test we address today. Whereas the “substantially
advances” inquiry before us now is unconcerned with the degree or type of burden a
regulation places upon property, Nollan and Dolan both involved dedications of
property so onerous that, outside the exactions context, they would be deemed per se
physical takings. In neither case did the Court question whether the exaction would
substantially advance some legitimatestate interest. See Dolan, supra, at 387–388;
Nollan,
18 LINGLE v. CHEVRON U. S. A. INC.
Opinion of the Court
supra, at 841. Rather, the issue was whether the exactions substantially advanced
the same interests that land-use authorities asserted would allow them to deny the
permit altogether. As the Court explained in Dolan, these cases involve a special
application of the “doctrine of ‘unconstitutional conditions,’ ” which provides that
“the government may not require a person to give up a constitutional right—here
the right to receive just compensation when property is taken for a public use—in
exchange for a discretionary benefit conferred by the government where the benefit
has little or no relationship to the property.” 512 U. S., at 385. That is worlds apart
from a rule that says a regulation affecting property constitutes a taking on its face
solely because it does not substantially advancea legitimate government interest. In
short, Nollan and Dolan cannot be characterized as applying the “substantially
advances” test we address today, and our decision should not be read to disturb
these precedents.
* * * Twenty-five years ago, the Court posited that a regulation of private property “effects a taking if [it] does notsubstantially advance [a]
legitimate state interes[t].” Agins, supra, at 260. The lower courts in this case took
that statement to its logical conclusion, and in so doing, revealed its imprecision.
Today we correct course. We hold that the “substantially advances” formula is not
avalid takings test, and indeed conclude that it has no proper place in our takings
jurisprudence. In so doing, wereaffirm that a plaintiff seeking to challenge a
governmentregulation as an uncompensated taking of private property may
proceed under one of the other theories discussed above—by alleging a “physical”
taking, a Lucas-type “total regulatory taking,” a Penn Central taking, or a land-use
exaction violating the standards set forth in Nollan and Dolan. Because Chevron
argued only a “substantially
19 Cite as: 544 U. S. ____ (2005)
Opinion of the Court
advances” theory in support of its takings claim, it was not entitled to summary
judgment on that claim. Accordingly, we reverse the judgment of the Ninth Circuit
and remand the case for further proceedings consistent with this opinion.
It
is
so
ordered.
Cite as: 544 U. S. ____
(2005) 1 KENNEDY, J., concurring
_________________ _________________
SUPREME COURT OF THE UNITED STATES
No. 04–163
LINDA LINGLE, GOVERNOR OF HAWAII, ET AL., PETITIONERS v. CHEVRON
U. S. A. INC.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH
CIRCUIT
[May 23, 2005]
JUSTICE KENNEDY, concurring.
This separate writing is to note that today’s decision does not foreclose the
possibility that a regulation might be so arbitrary or irrational as to violate due
process. Eastern Enterprises v. Apfel, 524 U. S. 498, 539 (1998)(KENNEDY, J.,
concurring in judgment and dissenting in part). The failure of a regulation to
accomplish a stated or obvious objective would be relevant to that inquiry. Chevron
voluntarily dismissed its due process claim without prejudice, however, and we have
no occasion to consider whether Act 257 of the 1997 Hawaii Session Laws “represents one of the rare instances in which even such a permissive standard has been
violated.” Apfel, supra, at 550. With these observations, I join the opinion of the
Court.
http://a257.g.akamaitech.net/7/257/2422/23may20051130/www.s
upremecourtus.gov/opinions/04pdf/04-163.pdf
March 10, 2016
Appellate
May 24, 2005
Lingle v. Chevron U.S.A. Inc. (04-163), Kelo v. New London, Conn. (04-808), Johanns v.
Livestock Marketing Ass’n (03-1164) and order list
Greetings, Court Fans!
With only about six weeks left in the Term, the Court picked up the pace yesterday, issuing
decisions in five cases. We’ve split up the summaries to make each Update a little easier to
digest -- this Update covers three cases, with the other two to follow.
First, in Lingle v. Chevron U.S.A. Inc. (04-163), the Court unanimously held that a property
owner claiming a regulatory “taking” cannot simply allege that a regulation does not “substantially
advance” a state interest. The case concerned a Hawaii statute limiting the rent that oil
companies could charge when leasing service stations. Applying Agins v. City of Tiburon, 447
U.S. 255 (1980), in which the Court noted that a regulation amounts to a taking of private property
if it does not substantially advance a legitimate interest, the District Court struck down the law
because it did not advance Hawaii’s stated goal of controlling gas prices, and the Ninth Circuit
affirmed. The Court reversed in an opinion by Justice O’Connor, who wrote that the “substantially
advances” test was an unfortunate example of how “a would-be doctrinal rule or test finds its way
into our case law through simple repetition of a phrase -- however fortuitously coined.”
Conceding that its takings jurisprudence “cannot be characterized as unified,” the Court noted
that the thrust of the case law was to identify regulatory actions that were functionally equivalent
to appropriating private property or ousting the owner from his domain. Agins concerned a
zoning regulation, and that Court derived the “substantially advances” language from a number of
due process cases involving zoning. This was “regrettable” (i.e., wrong) -- while means-ends
tests may be appropriate for due process cases (to test whether a regulation is arbitrary or
irrational), they are not valid for takings analysis, which involves the regulation’s burden on
private property regardless of how effective it is at serving a public interest. Also, the lower
court’s reading of Agins would demand heightened review of almost any regulation of private
property and require courts to substitute their predictive judgments for those of legislatures and
agencies. In a somewhat sympathetic nod to the Ninth Circuit, the Court concluded by stating
that while the lower courts followed Agins “to its logical conclusion, . . . today we correct course.”
Justice Kennedy concurred to note that the decision addressed only the takings issue, not the
due process issue, where the failure to accomplish a legitimate objective remained relevant. This
case has obvious implications for the Court’s still-outstanding decision in Kelo v. New London,
Conn. (04-808), concerning the seizure of city residents’ homes for use in developing a
conference center to generate higher tax revenues, as it indicates that the likelihood of the effort’s
success will not be a factor in the Court’s decision.
http://www.wiggin.com/pubs/scupdate_template.asp?ID=13248525
2005&groupid=5
March 10, 2016
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DAVID STIKES, on behalf of himself and|
all other persons similarly situated,
Plaintiff,
v.
No. 89-15208
CHEVRON U.S.A., INCORPORATED, a
Pennsylvania Corporation; and
DOES 1 through 50, inclusive,
Defendants.
BRIEF FOR APPELLANT
In this action, an employee seeks to enforce the California right of privacy against a company
that discharged him for refusing to "consent" to its random search of his private automobile.
The case was originally filed in state court, but it was removed on the theory that the claim
arose under federal law, and then dismissed because federal labor law is said to bar the State
of California from providing the right of privacy to workers like plaintiff who are subject to
collective bargaining agreements. This brief argues that (1) the case was improperly removed
because there was no basis for federal jurisdiction; (2) the court below should have abstained
from resolving the Supremacy Clause issue to permit the California courts to resolve
underlying questions of California law; and (3) the court below erred in holding that federal
law bars California from extending the right of privacy to union and nonunion workers alike.
JURISDICTION
The case was filed in state court, asserting claims solely under state law. The lower court
lacked jurisdiction of the case. Because Chevron's principal place of business is California,
there was no diversity jurisdiction. 28 U.S.C. § 1332(c). Jurisdiction was improperly asserted
under 29 U.S.C. § 185 and 28 U.S.C. § 1331, and the case was improperly removed under 28
U.S.C. § 1441.(1)
This Court has jurisdiction under 28 U.S.C. § 1291 to review the judgment of dismissal
entered by the district court on January 25, 1989. A timely notice of appeal was filed on
February 9, 1989. See Rule 4(a)(1), F.R.A.P.
QUESTIONS PRESENTED
1. Does a claim that an employer violated an employee's state right of privacy "arise under"
federal law solely because the employer asserts that the employee's claims are affected by a
collective bargaining agreement, and therefore that such claims are preempted by section 301
of the Labor-Management Relations Act? (CR 15, 16, 35, 36)
2. When an employer contends that state law claims are forbidden by the United States
Constitution, and preclusion depends on questions of state law, should a federal court abstain
from deciding the federal question until the employer has presented the state law issues to the
state courts and obtained an authoritative construction of state law from them? (CR 42, 43,
51)
3. Does the Supremacy Clause, coupled with section 301 of the Labor-Management Relations
Act and the collective bargaining agreement applicable here, forbid the State of California from
protecting its unionized as well as its nonunionized citizens against random searches of their
private automobiles, by providing causes of action for wrongful discharges for refusing to
consent to such searches? (CR 48)
STANDARD OF REVIEW
The rulings below, based entirely on issues of law, are reviewed de novo. A district court's
decision not to abstain is often reviewed for abuse of discretion. Newberry v. Pacific Racing
Ass'n, 854 F.2d 1142, 1151 (9th Cir. 1988). However, whether state law is uncertain, and
whether it is amenable to a construction that would obviate or narrow the constitutional
issues, are legal questions that are reviewed de novo. D'Iorio v. Delaware County, 592 F.2d
681, 686 (3d Cir. 1978). Moreover, the abuse of discretion standard cannot be applied when
the district court gives no reasons for a discretionary action. Hummell v. S.E. Rykoff & Co.,
634 F.2d 446, 452-453 (9th Cir. 1980). If the district court's colloquy with appellant's counsel
at oral argument is deemed an explanation for its decision not to abstain, it rested on a view
of the law of preemption that is itself reviewed de novo. Lewis v. Anderson, 692 F.2d 1267,
1269 (9th Cir. 1982).
STATEMENT
A. Facts.
Plaintiff-appellant David Stikes was employed by defendant-appellee Chevron USA, as a
member of a maintenance crew working out of Chevron's offices near Coalinga, California. His
employment was regulated by a variety of federal, state and local laws, as well as by a
collective bargaining agreement ("CBA") between Chevron and the International Union of
Petroleum and Industrial Workers. During Stikes' employment, he had never been disciplined;
to the contrary, his performance evaluations were all favorable, many recommended his
promotion, and Chevron had recognized his good performance less than four months before
he was fired. CR 1, Exhibit H, ¶¶ 4, 16.
Stikes traveled to work in his personal automobile, which he parked in a company parking lot.
He did not use the car for work purposes, and there was no other convenient means of
transportation to work. The nearest legal parking, apart from the company lot, was three
miles away. Id., ¶¶ 34-36.
In 1984, during the course of Stikes' employment, Chevron issued a policy asserting the right
to search its employees for drugs, weapons, and other materials. On July 2, 1987, a Chevron
security officer interrupted a training film that some of its employees, including Stikes, were
watching, to demand a search of everybody in the room, including not only the employees'
persons, but their lunchpails, lockers, and cars. Id., ¶ 5. At the time, Chevron refused to
explain why it was conducting the search, id., ¶ 6; later it said the purpose was to find
alcohol, narcotics, or firearms. Id., ¶¶ 18-19. However, Chevron did not contend that it had
probable cause, reasonable suspicion, or indeed any basis at all for suspecting that any of the
persons present possessed such items. Id., ¶¶ 22-26.
Stikes allowed the search of his person, lunch, and locker, but refused to turn over the keys of
his car so that it, too, could be searched. He reasoned that there was some reasonable
relationship between his person, lunchpail, and locker and the workplace, and so he decided to
allow those searches, hoping to preserve his means of livelihood. Id., ¶¶ 3, 6. But, he felt, in
America an individual may not be subjected to searches without some ground for thinking that
the individual has done something wrong, and so he drew the line at his car. Id., ¶¶ 29, 37.
Chevron disputes Stikes's vision of America. Chevron believes that it is entitled to search
workers and their personal property, even if not work-related, without any grounds. Thus,
when Stikes refused to be searched, Chevron summarily fired him. Id., ¶ 8. Stikes filed a
grievance asserting that, by firing him, Chevron had violated the CBA. Chevron disagreed, and
the union refused to seek arbitration, because the "case cannot be arbitrated . . . because it
has nothing to do with the union contract." Id., ¶ 33.
B. Proceedings Below.
On March 23, 1988, Stikes filed this action in California Superior Court. His complaint alleged
that Chevron's search, and the search policy on which it was based, violated his right of
privacy under the California Constitution. ER 51-62. He further claimed that his discharge for
refusing to be searched both contravened the public policy of the State of California and was
an "unlawful business practice" under California Code Section 17200, and that Chevron's
conduct was malicious and had intentionally inflicted emotional distress on him. All of these
torts were based on the privacy claim concerning the attempted random search of his car.
Stikes' claim made no reference to a CBA, was not predicated on anything in a CBA, and could
have been litigated without ever construing the CBA.
On March 30, 1988, Stikes moved for a preliminary injunction compelling his reinstatement
pending a decision on the merits, and a Superior Court hearing was set for April 15, 1988.
However, at Chevron's request, Stikes stipulated to continue the hearing until April 29, and
Chevron agreed to file its opposition to the preliminary injunction by April 22, 1988.
Instead, however, on April 22 Chevron removed the case to the United States District Court
for the Northern District of California, asserting that the complaint arose under federal law
because the district court would have jurisdiction over it under section 301 of the LaborManagement Relations Act ("LMRA"), 29 U.S.C. § 185. This jurisdiction, it was said, was based
on the facts that Chevron is a party to a CBA with the International Union of Petroleum and
Industrial Workers, and that this agreement regulates some of the terms and conditions of
Stikes' employment. According to Chevron, the existence of this agreement validated the
search policy and thus barred the State of California from giving Stikes the legal right not to
be searched.
On May 2, 1988, Stikes moved to remand the case to state court. Stikes pointed out that all of
his claims were based exclusively on California law and that none of his California causes of
action were based, in whole or even in part, on rights accorded him in the CBA. Stikes
acknowledged Chevron's argument that his state law rights were waived by the CBA and also
acknowledged that Chevron was entitled to litigate that waiver argument. Nevertheless, Stikes
argued that California law did not recognize this waiver doctrine, but treated the right of
privacy as inalienable; indeed, Stikes presented the district court with several California cases
that had adjudicated private and public sector drug-testing programs, including some in
unionized workplaces, in which there was no reference to a CBA. More important for purposes
of the motion to remand, he contended that Chevron's arguments constituted no more than a
federal law defense to his state law claims, and were not a basis for federal question
jurisdiction.
In response, Chevron disputed Stikes' analysis of California law. Chevron argued that the
constitutional right of privacy is waivable, and thus the court would be required to construe
the CBA to determine whether "plaintiff's union has explicitly or implicitly consented to the
drug search program . . .." CR 20, at 9. Chevron then argued, without actually expounding the
basis in the CBA, that the mere possibility of waiver meant that Stikes' rights under California
law were "completely preempted" by section 301 of the LMRA, and the case therefore arose
under federal law and had been properly removed. The district court denied the motion to
remand without stating any reasons. CR 33, ER 1.
Stikes then moved to reconsider the remand issue, presenting yet another California case that
struck down a drug-testing program without construing a contract, as well as an opinion of
California's Attorney General stating that employees' privacy rights vis-a-vis drug-testing
programs could not be waived. CR 35-37. Stikes also moved the district court to abstain from
deciding whether federal law barred California's enforcement of its common law regulation of
drug-testing, in order to permit the California courts to resolve the dispute between the
parties about the requirements of California law. In that way, Stikes contended, the state law
question might be resolved in such a way that the federal courts could avoid addressing the
validity of California's privacy law under federal law. CR 42-44.
Chevron opposed both reconsideration and abstention, and moved for summary judgment on
the ground that Stikes' claims were preempted by the CBA and section 301. Chevron argued
that the preemption issue had necessarily been decided in its favor in the course of resolving
the issue of federal jurisdiction, and that there was no reason to revisit that issue. With
respect to abstention, Chevron denied that this case involved any questions of federal
constitutional law, ignoring the fact that preemption means that a state rule is barred by the
Supremacy Clause. Again the district court ruled against Stikes, denying both abstention and
reconsideration, CR 54, ER 2, and again Judge Legge provided no opinion to explain his
decision on a question that, during oral argument, he described as "difficult." ER 42. At that
time, Judge Legge suggested that even if the state courts were to hold that the state law of
privacy is inalienable, and therefore not waivable by a private agreement, federal law required
him to look first at the CBA before he could decide whether a state law of privacy was
enforceable. Id. at 41-42. Accordingly, he granted Chevron's motion for summary judgment,
dismissing Stikes' state law claims on the ground that they were completely preempted by
section 301. CR 59, ER 4. Neither in the course of this proceeding, nor during the processing
of his grievance under the CBA, has Stikes received any ruling on the question of whether
California law actually protects his privacy, or even on the question whether such state law
protections have actually been waived.
SUMMARY OF ARGUMENT
1. In order for removal to be proper, there must have been federal question jurisdiction over
Stikes' claim. Assuming for these purposes that Stikes' privacy claim could be waived by a
CBA, such waiver is a defense to Stikes' claim, and is not a basis for removal. That is the clear
holding of the Supreme Court in Caterpillar v. Williams, 482 U.S. 386 (1987), as reaffirmed in
Oklahoma Tax Commission v. Graham, 109 S. Ct. 1519, 1521 (1989): state claims do not
arise under federal law "even though an interpretation of the collective bargaining agreement
might ultimately provide the employer a complete defense to the individual claims, and even
though employee claims on the collective bargaining agreement would have been the subject
of original federal jurisdiction." In Caterpillar, as here, the plaintiffs claimed a source of rights
apart from the CBA -- in Caterpillar, contracts allegedly entered on an individual basis -- and
the employer argued that these contractual rights had been waived by a CBA. The Supreme
Court's decision that Caterpillar's waiver defense would have to be litigated in state court
applies equally to Chevron's defense in this case.
2. Because Chevron's preemption arguments depend on its analysis of elements and defenses
to state law privacy claims, if the district court had jurisdiction, it should have abstained to
permit the California courts to resolve the state law questions. The district court decided,
based on its reading of state law, that California is forbidden by the United States Constitution
to give Stikes enforceable privacy rights. Yet, if a state court had adopted Stikes' view of
California law, under which privacy rights cannot be waived by a CBA, it would have been
unnecessary to reach the constitutional question because the court would not have had to
consider the CBA. If, on the other hand, the state courts had decided, contrary to Stikes'
argument, that his claim did depend on the CBA, Chevron could have returned to federal court
to determine, under federal labor law principles, whether Stikes' state law claims could
proceed and in what manner.
3. The lower court erred in concluding that the mere possibility that Stikes' privacy rights were
waived by the CBA precluded judicial enforcement of Stikes' state privacy rights. The error is
three-fold. First, the right asserted here is not waivable. Second, "waiver" is not a question of
the meaning of the CBA. The standard for waiver of protected rights, under both federal and
state law, is whether the rights have been clearly, unequivocally, and knowingly surrendered.
As the Supreme Court recognized in Lingle v. Norge, 108 S. Ct. 1877 (1988), that is a
question to be decided by the courts, separate and apart from any interpretation of the CBA.
Third, even if waiver were simply a question of the meaning of the CBA, that does not mean
that Chevron's bare assertion of "waiver" automatically preempts Stikes' privacy claims.
Rather, the privacy claims are barred only if there has been a waiver, and although federal
labor law principles would govern the resolution of the waiver issue, they would not require
summary dismissal of Stikes' state law claims here. Indeed, Lingle recognizes that there may
be questions about the CBA that come to the fore during the litigation of a state law claim,
without preempting the basic state law claim itself. Instead, the court should first look to see
whether the waiver claim is a substantial one, and if so, the question should be resolved under
federal procedures, reserving the state law claims to be resolved in light of the decision on the
waiver question.
4. Chevron's argument is based on the following propositions, each of which must be accepted
in order to affirm the judgment below: (1) Stikes' privacy rights can be waived in collective
bargaining; (2) Because Chevron has asserted that the CBA waives those rights, a court
considering Stikes' state law claims would have to decide whether, in fact, his rights had been
waived; (3) Because a court would have to consider whether the contract waived Stikes'
rights, Stikes' privacy claim under state law depends on the meaning of the CBA; (4) Because
Stikes' state claims depend on the meaning of the contract, they are necessarily preempted by
section 301; and (5) Section 301 converts any state claims that it preempts into federal law
claims, and so Stikes' claims arose under federal law, were properly removed from state court,
and were properly dismissed without a hearing.
In deciding this case, the Court will necessarily focus on the specifics of each party's
arguments, but we urge the Court not to lose sight of the totality of Chevron's claim. Chevron
argued, and the district court decided, that simply because state courts would have to
consider the claim that Stikes' union gave away his privacy rights, the privacy rights
themselves are destroyed by the preemptive effect of federal labor law and Stikes has been
left with no rights to enforce beyond those accorded him by the CBA. Put another way,
Chevron contends that, simply because it has invoked the contract in its arguments, and the
Court will look at the contract when weighing those arguments, federal labor law requires that
the state law claim be preempted. We submit that whatever the proper approach may be to
resolving waiver defenses in cases such as this, Congress could not possibly have intended to
empower employers to destroy state law claims simply by asserting the existence of a waiver
in a CBA.
ARGUMENT
INTRODUCTION AND SUMMARY OF STIKES' STATE LAW CLAIMS
In order to understand why Judge Legge erred by accepting jurisdiction of the case, refusing
to abstain, and holding that enforcement of Stikes' state-law rights was barred by federal law,
it is first necessary to understand the claims that Stikes was making under state law. Stikes'
state law claim is based on the right of privacy, which California expressly guarantees as an
"inalienable" right of privacy in its Constitution. Article I, Section 1, as amended by the voters
in 1972, provides as follows:
All people are by nature free and independent and have inalienable rights. Among these are
enjoying and defending life and liberty, acquiring, possessing, and protecting property, and
pursuing and obtaining safety, happiness and privacy.
The California Supreme Court has repeatedly held that this section guarantees privacy rights
to all Californians, and authorizes civil suits to enforce that right. E.g., White v. Davis, 13
Cal.3d 757, 774-775, 532 P.2d 857 (1975); City of Santa Barbara v. Adamson, 27 Cal.3d 123,
610 P.2d 436 (1980); Long Beach City Employees' Ass'n v. City of Long Beach, 41 Cal.3d 937,
948, 719 P.2d 660 (1986). See also In re William G., 40 Cal.3d 550, 563, 221 Cal. Rptr. 118
(1985) (right is "the foundation of individual rights guaranteed by our state and national
Constitutions").
Moreover, numerous decisions have held that the state constitutional right of privacy (unlike
the federal constitution) affords protection against private, not just governmental action. E.g.,
Cutter v. Brownbridge, 183 Cal. App. 3d 836, 228 Cal. Rptr. 545, 549 (1986); Bartling v.
Superior Court, 163 Cal. App. 3d 186, 195, 209 Cal. Rptr. 220 (1984); Rulon-Miller v. IBM
Corp., 162 Cal. App. 3d 241, 248, 255, 208 Cal. Rptr. 524 (1984); Kinsey v. Macur, 107 Cal.
App. 3d 265, 272, 165 Cal. Rptr. 608 (1980); Porten v. University of San Francisco, 64 Cal.
App. 3d 825, 829, 134 Cal. Rptr. 839 (1976); Laguna Pub. Co. v. Golden Rain, 131 Cal.
App.2d 816, 851, 182 Cal. Rptr. 813, 834 (1982) ("Privacy is protected not merely against
state action; it is considered an inalienable right which may not be violated by anyone.") See
also Chico Feminist Women's Hlth. Ctr v. Butte Glen Med. Soc., 557 F. Supp. 1190, 1203 (E.D.
Cal. 1983). See also White v. Davis, 13 Cal.3d 757, 774-775, 533 P.2d 222 (1975), quoting
parts of the voters' pamphlet as the authoritative legislative history of the constitutional right
of privacy, making clear that the right of privacy extends to intrusions by business as well as
government.
Furthermore, there is little question that the right of privacy is violated when employees are
required to submit to random searches of their private property, including their automobiles.
Rather, a search may be conducted only if there is a showing of probable cause or, at the very
least, a reasonable suspicion that the employee has engaged in wrongdoing or possesses
contraband. In re William G., 40 Cal.3d 550, 563-564, 221 Cal. Rptr. 118, 125 (1985); People
v. Gale, 46 Cal.2d 253, 257, 294 P.2d 13 (1956); Wirin v. Horrall, 85 Cal. App.2d 497, 504,
193 P.2d 470, 474 (1948). Cf. Blackstone, Commentaries, Book 2, ch. 1.(2)
In the court below, Chevron did not dispute these aspects of Stikes' claim. Instead, it argued
that Stikes' privacy rights could be waived as a matter of California law, and that, as a matter
of fact, his rights had been waived in the CBA. Stikes disputed both aspects of this waiver
argument, pointing to the language of the California Constitution, which describes privacy as
an "inalienable" right, and arguing that employers may not lawfully insist that employees
agree to give away their privacy rights as a condition of employment. And, in fact, California's
Supreme Court and its appellate courts have repeatedly held that an employee cannot be
compelled to waive constitutional or statutory rights as a condition of employment, even if a
CBA purports to effect such a waiver. E.g., Long Beach City Employees' Ass'n v. City of Long
Beach, 41 Cal.3d 937, 951, 719 P.2d 660 (1986); Judson Steel Corp. v. Workers
Compensation Appeals Board, 22 Cal.3d 658, 665 n.5, 150 Cal. Rptr. 250 (1978); Fire
Fighters Local 55 v. City of San Leandro, 181 Cal. App. 3d 179, 182-183, 226 Cal. Rptr. 238
(1986). Cf. Machinists Auto. Trades Dist. Coun. 190 v. Utility Trailer Sales, 141 Cal. App. 3d
80, 82-83, 190 Cal. Rptr. 98, app. dism., 464 U.S. 1005 (1983). Counsel also submitted to the
district court several rulings where trial courts had found violations of employees' privacy
rights and issued injunctions against drug-testing of employees, some of them in the private
sector, without considering the contents of CBAs. CR 29, ER 63-91.
Stikes' claim in this case, very simply put, is that he had a right of privacy in his personal
automobile, and that the car could not be searched without probable cause, which admittedly
was lacking here. Accordingly, when Chevron asked for the keys to his car, he had a right to
refuse. When he was fired for refusing to tender his keys, he was fired in reprisal for asserting
his right of privacy. The complaint alleges that Chevron committed various wrongs in the
course of demanding a search and firing Stikes for refusing to "consent" -- the tort of wrongful
discharge, the tort of intentional infliction of emotional distress, and violation of the statute
forbidding "unlawful business practices" -- but each wrong is grounded on his claim that the
right of privacy entitled him to refuse to permit a search of his car.
Chevron contends that the rights that Stikes would otherwise have enjoyed were waived in the
collective bargaining agreement. Stikes' response to this contention is two-fold: first, that
state law does not permit waiver of his privacy rights, and second, there is nothing in the CBA
that meets the standards for finding such waivers i.e., a clear, unmistakable, and knowing
surrender of rights. Thus, the fact that there may be no affirmative right of privacy in the CBA
does not mean that the CBA has waived preexisting privacy rights under California law.
I. THE POSSIBILITY THAT A COLLECTIVE BARGAINING AGREEMENT MIGHT BE HELD
TO HAVE WAIVED A CLAIM BASED ON THE STATE CONSTITUTIONAL RIGHT OF
PRIVACY DOES NOT TRANSFORM THAT CLAIM INTO A CLAIM ARISING UNDER
FEDERAL LAW THAT MAY BE REMOVED TO DISTRICT COURT.
The district court should not have reached the preemption issue because it lacked jurisdiction.
Plaintiff filed claims based solely on California law. In its defense, Chevron argued that
plaintiff's union had waived his right to assert those claims in its CBA, and that the
determination of its waiver defense raises a federal question which is a proper basis for
removal. However, as more fully explained below, because the Supreme Court has
unanimously decided three times in recent years that federal defenses do not create federal
jurisdiction, Chevron's defense does not transform Stikes' claim into one that arises under
federal law. Franchise Tax Board v. Laborers Vacation Trust, 463 U.S. 1 (1983); Caterpillar v.
Williams, 482 U.S. 386 (1987); Oklahoma Tax Comm. v. Graham, 109 S. Ct. 1519 (1989).
This rule against defensive removal applies even when the argument for preemption is based
on the doctrine of "complete preemption" under section 301. Id. We acknowledge that some of
this Court's decisions seem to point in a different direction, but as we explain infra at 20-23,
they have improperly confined Caterpillar to its facts, or, by misstating those facts, they have
in effect refused to follow Caterpillar at all. In this section, after reviewing Caterpillar, we
discuss those cases and ask the Court to revisit them in light of the unanimous restatement
and reaffirmance of Caterpillar's holding in Oklahoma Tax Commission.
In Caterpillar, several employees sued under state law to enforce contracts which, they
alleged, had been formed by Caterpillar's promises, made to them as individuals, that they
would be protected against layoffs in the event the plant were closed. The promises were
allegedly made both at times when the employees held managerial or salaried positions, which
were outside the bargaining unit represented by a union, as well as at the time when the
employees were demoted to hourly positions that were covered by the CBA. 482 U.S. at 389.
Indeed, some of the promises may also have been made after the employees began working
as part of the bargaining unit. 482 U.S. at 398 n.12.
Although the Supreme Court affirmed this Court's holding that the case was improperly
removed, it unanimously rejected this Court's reasoning. 482 U.S. at 391 n.4. According to the
Supreme Court, the need to determine whether a plaintiff's complaint is properly pleaded does
not deny a plaintiff the power to remain the master of his or her own claim; the plaintiff may
opt to avoid federal jurisdiction by exclusive reliance on state law. 482 U.S. at 392. Even the
doctrine of complete preemption does not rob a plaintiff of this right, so long as the state law
claim is not substantially dependent on analysis of a CBA. Thus, the Caterpillar plaintiffs had
asserted a breach of individual employment contracts, and even if they could also have
asserted claims under the CBA, as masters of the complaint, they were free not to do so. 482
U.S. at 393. Because their complaint did not rely on the contract, or even address the
relationship between the individual contracts and the collective agreement, the claims did not
arise under section 301, and the case could not be removed based on the doctrine of complete
preemption. Id.
The Court then turned to the impact of Caterpillar's defense based on the rule of J.I. Case Co.
v. NLRB, 321 U.S. 332 (1944), which limits the extent to which employers may adopt
individual contracts that are inconsistent with the collective agreement. The Court had noted
in Franchise Tax Board that complete preemption under section 301 does not apply whenever
a suit merely "relates to" a CBA; it is only state suits to enforce a CBA that "arise under"
section 301 and hence are removable. 463 U.S. at 25 n.28. Thus, in Caterpillar, the Court held
that, even if the rule of J.I. Case might ultimately be employed so that the CBA superseded
the rights that plaintiffs could otherwise have enjoyed under their individual contracts, that
federal law defense would have to be litigated in state court:
It is true that when a defense to a state claim is based on the terms of a collective-bargaining
agreement, the state courts will have to interpret that agreement to decide whether the state
claim survives. But the presence of a federal question, even a section 301 question, in a
defensive argument does not overcome the paramount policies embodied in the well-pleaded
complaint rule -- that the plaintiff is the master of the complaint, that a federal question must
appear on the face of the complaint, and that the plaintiff may, by eschewing claims based on
federal law, choose to have the cause heard in state court. When a plaintiff invokes a right
created by a collective-bargaining agreement, the plaintiff has chosen to plead what we have
held must be regarded as a federal claim, and removal is at the defendant's option. But a
defendant cannot, merely by injecting a federal question into an action that asserts what is
plainly a state-law claim, transform the action into one arising under federal law, thereby
selecting the forum in which the claim shall be litigated. If a defendant could do so, the
plaintiff would be master of nothing.
482 U.S. at 398-399 (emphasis in original).(3)
Caterpillar controls the removal issue in this case. As in Caterpillar, the plaintiff here alleges
that his employer has violated a right apart from those created by the CBA. As in Caterpillar,
the employer defends on the ground that the CBA between the employer and the plaintiff's
union waived the right that would otherwise have been enjoyed by the plaintiff. And, as in
Caterpillar, the employer removed the case from state to federal court on the theory that,
because it is alleging that the CBA negates plaintiff's privacy rights, and that, because the
courts will have to examine the CBA in order to resolve the waiver defense, the claim itself
arises under section 301 and is removable. Therefore, as in Caterpillar, the waiver defense
does not transform the claim itself into a federal claim that is within the district court's original
jurisdiction. Accord, Local 57 v. Bechtel Power Corp., 834 F.2d 884, 889 (10th Cir. 1987).
In a number of cases, however, this Court has authorized removal on the ground that
plaintiffs' tort claims, based on intentional infliction of emotional distress, an implied covenant
of good faith and fair dealing, or even privacy, might require reference to the CBA insofar as
the employer had alleged that the claims were inconsistent with the CBA. The leading case on
the subject is Young v. Anthony's Fish Grottos, 830 F.2d 993 (9th Cir. 1987), which has been
applied uncritically to a number of other cases. However, as we now explain, these decisions
were erroneous, and in any event are inconsistent with subsequent Supreme Court precedent.
In Young, a former restaurant employee agreed to return to work there, after allegedly being
specifically promised that she would be hired "on the same terms as before, subject to
discharge only for just cause." 830 F.2d at 996. When she was fired on the very day she
returned to work, supposedly without just cause, she sued in state court alleging breach of
contract and a number of torts that depended on the contract. The Court held that the
contract claim had been properly removed because it was completely preempted by section
301. Yet the discussion of the jurisdictional issue was summary, and indeed was analytically
relevant only to the merits of preemption, not to removal. First, the Court invoked three of its
own pre-Caterpillar cases holding that "any independent agreement of employment concerning
[a] job position [covered by the CBA] could be effective only as part of the collective
bargaining agreement." 830 F.2d at 997, citing e.g., Olguin v. Inspiration Consol. Copper Co.,
740 F.2d 1468 (1984). Then it erroneously distinguished Caterpillar on the ground that it
supposedly concerned only promises made while the employees were in positions not covered
by the CBA. 830 F.2d at 998. Compare page 18, supra. Next, it said that federal law allowed
unions to waive individual agreements. Id. And finally it ruled that, because there was no
Supreme Court ruling subsequent to the pre-Caterpillar decisions such as Olguin that
undermined those decisions, the pre-Caterpillar decisions would be followed.
In fact, however, there was a great deal in Caterpillar that was inconsistent with preCaterpillar decisions such as Olguin. Indeed, more space in Young is devoted to discussing the
footnote in Caterpillar that disapproved this Court's reasoning in Caterpillar itself than to
explaining the three aspects of Caterpillar that make it clear that cases such as Olguin are no
longer good law. The portions of Caterpillar that were ignored in Young include the following:
(1) Caterpillar included a lengthy discussion of the role of waiver defenses, quoted above at
19-20, including the square holding that such defenses do not transform a claim under an
allegedly independent agreement into a federal law claim that is removable under the doctrine
of complete preemption.(4) (2) Some of the promises on which the Caterpillar plaintiffs sued
were made at the time they were demoted back to the collective bargaining unit, 482 U.S. at
389, a time equivalent for legal purposes with time when Young returned to the bargaining
unit and was given promises. (3) Caterpillar held that even if some of the promises on which
the plaintiffs sued "were negotiated with [them] while the latter were covered by a collective
agreement," 482 U.S. at 398 n.12, "this fact is irrelevant to the removal question. . . .
[R]espondents' state law claims might be preempted by the NLRA, but they would not be
transformed into claims arising under federal law." Id.
Moreover, Supreme Court decisions subsequent to Young and its progeny have undermined
their viability. Most recently, the Supreme Court explained the significance of Caterpillar in
Oklahoma Tax Commission v. Graham, 109 S. Ct. 1519 (1989). The Oklahoma Tax
Commission sued the Chickasaw Nation to collect taxes on receipts from one of its enterprises,
but the Nation, interposing the federal defense of tribal immunity, removed the case to federal
court. The Tenth Circuit found removal appropriate because, even though the complaint did
not raise a federal question, "such a question is inherent within the complaint because of the
parties subject to this action." 109 S. Ct. at 1520, quoting 846 F.2d at 1260. The Supreme
Court unanimously rejected that argument in a peremptory per curiam opinion:
In Caterpillar, we ruled that application of the well-pleaded complaint rule defeated federal
question jurisdiction, and therefore removability, in a case in which the employees sued on
personal state employment law contracts. We refused to characterize these state law claims as
arising under federal law even though an interpretation of the collective bargaining agreement
might ultimately provide the employer a complete defense to the individual claims, and even
though employee claims on the collective bargaining agreement would have been the subject
of original federal jurisdiction. The state law tax claims in the present case must be analyzed
in the same manner.
109 S. Ct. at 1521 (emphasis added).
As in Oklahoma Tax Commission, the status of the parties here, i.e., the fact that Stikes was
represented in collective bargaining by the union, does not convert his state law claim into one
based on the CBA, and even if Chevron's proffered interpretation of the CBA might offer a
complete defense to Stikes' privacy claim, that does not create federal jurisdiction over that
claim. See also Lingle v. Norge, 108 S. Ct. 1877, 1883 n.9 (1988) (waiver question should be
resolved by the courts under a "clear and unmistakable waiver" standard, implying that
question does not arise under section 301 requiring arbitral interpretation).
For all these reasons, the district court erred in holding that the case had been properly
removed, and the judgment should be vacated with instructions to remand the case to state
court.
II. ABSTENTION WOULD ALLOW THE CALIFORNIA COURTS TO ADDRESS STATE LAW
QUESTIONS, INCLUDING THE ROLE PLAYED BY COLLECTIVE BARGAINING
AGREEMENT IN LITIGATION OVER PRIVACY ISSUES, WHOSE RESOLUTION MIGHT
AVOID THE NEED TO DECIDE WHETHER PRIVACY RIGHTS ARE PREEMPTED UNDER
THE SUPREMACY CLAUSE.
The Court need not decide whether Stikes' state law privacy claims are barred by the
Supremacy Clause of the United States Constitution, in conjunction with federal labor law and
the CBA, if it decides to abstain from addressing the federal questions pending determination
of the underlying state law issues, in particular the issue of whether plaintiff's claim can be
waived by his union in the CBA.
It is a long-standing principle of federal jurisdiction that the federal courts should, where
possible, avoid decisions on constitutional questions. Ashwander v. Tennessee Valley
Authority, 297 U.S. 288, 345-348 (1936) (Brandeis, J.). One of the standard ways to avoid
unnecessary constitutional decisionmaking is by construing statutes in such a way that the
constitutional question is not presented. E.g., DeBartolo Corp. v. Florida Gulf Coast Bldg. &
Const. Trades Coun., 108 S. Ct. 1392, 1397 (1988).
This principle takes on an added dimension when it is state law that is said to contravene the
constitution, for three principal reasons. First, invalidation of state law calls into play
considerations of comity between the state and federal governments that discourage
unnecessary trampling of the state's rights and powers by federal authorities. Second,
because the federal court's view of state law is not binding, the ruling on both the underlying
state law questions and the application of constitutional law to the state law, as construed,
could be seen as an advisory opinion. Moore v. Sims, 442 U.S. 415, 428 (1979). Third, when
state law is construed by a federal court, the court inevitably makes decisions about state
policies that ought to be left to the states to decide. For example, it is far preferable to let the
states decide whether to run the risk of having state law invalidated, or to curb the reach of
state law that causes the constitutional question to be approached. Or, to the extent that
there is a choice among the ways in which state law may be construed to avoid constitutional
questions, the state courts ought to be given the opportunity to make the policy choices that
are implicit in deciding which limiting construction ought to be imposed on state law. Cf. Harris
County Comm'rs Court v. Moore, 420 U.S. 77, 87-88 (1975) (state courts should have choice
of remedies to be applied if there is a constitutional problem).
Consequently, the Supreme Court has held in a long line of cases, beginning with Railroad
Comm. v. Pullman, 312 U.S. 496 (1941), that it is incumbent on the federal courts to abstain
from addressing the constitutionality of state law where the law fairly admits of a construction
that would avoid the constitutional question. Harris Cy. Comm'rs Court v. Moore, 420 U.S. 77
(1975); United Gas Pipeline Co. v. Ideal Cement Co., 369 U.S. 134 (1962); AFL v. Watson,
327 U.S. 582 (1946). The courts have repeatedly applied Pullman abstention to avoid
unnecessary rulings on preemption challenges to state laws. AFL v. Watson, supra; Congress
of Industrial Org. v. McAdory, 325 U.S. 472, 476 (1945); IBEW Local 1245 v. Public Serv.
Comm., 614 F.2d 206, 212-213 (9th Cir. 1980).
In this case, there is a fundamental disagreement over whether the description in the
California Constitution of the right of privacy as "inalienable" made Stikes' right not to have his
car search nonwaivable by his union in the CBA. If the California courts were to hold that the
CBA is irrelevant (because a possible waiver would not be recognized or because the standard
for finding waivers does not depend on the meaning of a CBA), that would make it
unnecessary for this Court to decide whether section 301 of the LMRA, in conjunction with the
Supremacy Clause of the constitution, preempts the Stikes' privacy law claim.
In the court below, Chevron's principal objection to abstention was that plaintiff had offered
only speculation about the possibility that state law might be construed in such a way that the
preemption question would be avoided. We disagree, and believe that the authority set forth
on pages 41-42, infra, and 15-16, supra, shows that state law points strongly in the direction
of a nonwaivable right. Although this Court in Utility Workers Local 246 v. Southern California
Edison, 842 F.2d 1083, 1086 (9th Cir. 1988), was not prepared to recognize a non-waivable
right against drug-testing because of the absence of reported state decisions on that subject,
the right against car searches is long-established in California, supra page 14, and there is no
reason to believe that the general rule against waiver would not apply to car searches as
well.(5)
If this Court upholds the removability of this case to federal court, the argument for abstention
in this case is particularly strong because of this Court's decision in Utility Workers, supra.
There, this Court stated that, because it could find no state decision holding that state privacy
rights (there, with respect to drug-testing) may not be waived by a CBA, it would not itself
hold that such rights are nonwaivable, and the state law claims were both preempted and
removable. In light of that holding, any unionized employer confronted with a state-law-based
privacy claim has an opportunity to seek removal based on section 301 preemption. Indeed, it
might constitute malpractice for lawyers representing an employer to fail to seek removal,
because if the case were removed, the employer could count on invoking the ruling in Utility
Workers, yet if the case stayed in state court, the employer would risk the possibility that the
privacy rights might ultimately be held nonwaivable, thus undercutting the state law basis of
this Court's Utility Workers decision.
In those circumstances, the state courts will never have an opportunity to pass on the
underlying state law questions, and only by abstention could this Court gain assurance that its
analysis of state law in Utility Workers, which under settled doctrine cannot be the final word
on the subject, is indeed correct. Surely, the doctrine of removal based on preemption should
not become a tool to prevent the state from ever deciding whether its own law is such that
preemption is appropriate.
****
We do not underestimate the difficulties posed for a party like Chevron asserting its rights
under the federal constitution when a federal court directs that the state courts must first be
given an opportunity to avoid constitutional issues by construing state law. Undersigned
counsel have represented many plaintiffs asserting constitutional rights in cases where courts
abstained, and we have strenuously argued against abstention because our clients preferred
to be able to litigate their rights in a single proceeding rather than in two, as England v.
Louisiana Board of Med. Exam., 375 U.S. 411 (1964), requires. But what is sauce for the
plaintiff goose is sauce for the defendant gander.
Of course, if the Court refuses to permit removal of cases such as this, both the federal and
the state law issues can be resolved in one state court proceeding. Not only are the state
courts as capable as the federal courts in applying the federal law of preemption to defensive
questions such as waiver, but if state courts err in applying federal preemption law, a
defendant always has the option of seeking review in the United States Supreme Court. If,
however, a federal court errs in applying state law in a case that has been removed based on
preemption grounds, a plaintiff has no way to obtain state court review on the state law
question.
But if the Court is prepared to hold that Chevron's defense created federal jurisdiction, the
Court should not allow its speculations about state law to be turned into a permanent barrier
against state enforcement of its constitutional provision on privacy. Because state court
interpretation of that provision might well avoid the need for this Court to apply the federal
labor laws to invalidate such state regulation, the district court should have abstained.
III. THE POSSIBLE NEED TO REFER TO A COLLECTIVE BARGAINING AGREEMENT TO
DETERMINE WHETHER STIKES' RIGHTS UNDER STATE PRIVACY LAWS HAVE BEEN
WAIVED IN COLLECTIVE BARGAINING DOES NOT REQUIRE THAT THE STATE CLAIMS
BE PREEMPTED BY THE CONTRACT.
In order to understand why defendants' preemption argument must fail, it is useful to begin
by briefly reviewing the development of federal labor and preemption law, culminating in
recent decisions such as Lingle v. Norge, 108 S. Ct. 1877 (1988), that defeat Chevron's claim
of preemption here. We then turn to a discussion of this Court's cases since Lingle, and show
both how they differed from the issue presented here and how, in some important respects,
they failed to take account of portions of the Supreme Court's opinion in Lingle.
A. It is black letter law that, before a court may forbid a state to regulate conduct within its
borders, such as employer searches of private automobiles at issue here, it must first conclude
that Congress intended this result. As the Supreme Court has repeatedly stated in labor as
well as other preemption cases, Congress' intent is "the ultimate touchstone." Allis-Chalmers
v. Lueck, 471 U.S. 202, 208 (1985). Moreover, given the respect due the states in our federal
system, there is a strong presumption against finding Congressional intent to preempt any
state laws. Commonwealth Edison Co. v. Montana, 453 U.S. 609, 634 (1981).
Neither the language of section 301, nor its legislative history, provides a basis for concluding
that any substantive state regulation of employee rights is inconsistent with Congress'
purpose. The purpose of section 301 was to assign the development of a federal common law
of CBAs to the federal courts. Textile Workers v. Lincoln Mills, 353 U.S. 448 (1957). Because
this law has been developed by the unelected judiciary essentially on its own, without
substantial guidance from Congress, the courts should be especially circumspect about making
the policy judgments that are implicit when state laws, based on public policies deemed
important by the several states, are overridden on the ground of conflict with section 301. In
that regard, the Supreme Court has held that the application of state contract law to
determine the meaning of CBAs would be inconsistent with the task assigned by Congress of
developing a federal common law of labor contract to govern those agreements. Teamsters
Local 174 v. Lucas Flour Co., 369 U.S. 95 (1962). But the Court has never done what Chevron
asks this Court to do here, i.e., to hold that a substantive state regulation granting important
rights to employees is completely superseded by the law of the CBA.
In assessing this argument, we first note that Congress plainly intended that the federallyencouraged system of collective bargaining will exist side-by-side with a wide variety of
federal laws governing substantive terms in the employment relationship, such as health and
safety, pensions, and wages and hours. E.g., Occupational Safety and Health Act, 29 U.S.C.
§§ 651 et seq.; Employee Retirement Income Security Act, 29 U.S.C. §§ 1001 et seq.; Fair
Labor Standards Act, 29 U.S.C. §§ 201 et seq. The subjects covered by these statutes are
within the mandatory scope of bargaining, so that employers are expected to negotiate about
them with unions and indeed to sign CBAs regulating them in one respect or another. See
BNA, I The Developing Labor Law 773-786, 813-815 (2d ed. 1983). Yet employers must
comply with their federal statutory duties in addition to whatever they agree to in CBAs on the
same subjects. E.g., Jewell Ridge Coal Corp. v. Mine Workers Local 6167, 325 U.S. 161, 167
(1945). Among the forms of regulation of the employment relationship that Congress has
subjected to public law, in addition to whatever private law is created by collective bargaining,
is the discharge of employees because they have exercised their federal constitutional rights.
McDonald v. City of West Branch, 466 U.S. 284 (1984).
These federal statutes also create enforcement mechanisms which may be invoked
notwithstanding any limitations that are imposed on the enforcement of contractual rights
pertaining to the same subject matter. E.g., Barrentine v. Arkansas-Best Freight Syst., 450
U.S. 728 (1981). Congress has chosen not to permit the policies of these employment statutes
to be subjected to interpretation and enforcement, and thus perhaps to be undermined, by
private arbitration generally authorized by CBAs. This protection against preclusion by the
grievance and arbitration procedure extends to the enforcement of federal constitutional rights
under 42 U.S.C. § 1983. McDonald v. City of West Branch, 466 U.S. 284 (1984).
Nor has Congress barred the states from imposing additional substantive terms and conditions
on the employment relationship. To the contrary, the states have traditionally been allowed to
legislate in such areas as workers compensation, wages and hours, and employment
discrimination. Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756 (1985). To be
sure, in some statutes Congress has explicitly barred state regulation of the same subject.
E.g., Section 514, Employee Retirement Income Security Act, 29 U.S.C. § 1144. But Congress'
explicit decision to preempt state regulation of a few, select substantive subjects makes it
highly unlikely that Congress intended to deny states the right to regulate other terms and
conditions of employment not specifically preempted by federal legislation. See Malone v.
White Motor Corp., 435 U.S. 497, 504-505 (1978). To the contrary, as the Court observed in
holding that state minimum labor standards are not preempted, "It would turn the policy that
animated the Wagner Act on its head to understand it to have penalized workers who have
chosen to join a union by preventing them from benefiting from state labor regulations
imposing minimum standards on non-union employers." Metropolitan Life Ins. Co. v.
Massachusetts, supra, 471 U.S. at 755.
Following this analysis, the Supreme Court has held that section 301 does not preempt claims
made under a state law that sets forth minimum labor standards, so long as resolution of the
state claim does not depend on the CBA. Lingle v. Norge, 108 S. Ct. 1877 (1988). As Illinois
extended its law of retaliatory discharge to union and non-union employees alike, so too
California extends its privacy rights to union and non-union employees alike, and therefore
section 301 may not be used to second-guess that decision because there is plainly no need to
consider the CBA in assessing Stikes' privacy claim, with one possible exception, to which we
now turn.
Chevron argues that, unlike Lingle's retaliatory discharge claim, Stikes' privacy claim depends
on the CBA because any privacy rights that he would otherwise enjoy were waived in the
agreement. But even if Stikes' claim were waived by his union, a matter which we discuss
below, that is very different from the sort of dependence that has led the Supreme Court to
find claims so dependent on a CBA that they are preempted by section 301.
The only Supreme Court cases finding such preemption since Lucas Flour, where the plaintiffs
avowedly relied on a CBA, are Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1985), and IBEW
v. Hechler, 481 U.S. 851 (1987). But in Allis-Chalmers the plaintiff claimed that he suffered
injury by the way in which the employer and insurer "tortiously" performed their alleged
contractual duties; in Hechler the plaintiff claimed that the union had made certain
commitments in the CBA and that she suffered injury from the union's "tortious" violation of
the duties thus assumed. In those circumstances, the Supreme Court found that the alleged
torts were no more than glorified claims of contractual violation. If a state could create a tort
which is defined by the contractual obligation, it would be able to evade the Congressional
"mandate[] that federal law govern the meaning given contract terms." 471 U.S. at 219-220.
The state would also be able to deprive unions and employers of "their federal right to decide
who is to resolve contract disputes." Id. at 220. Hence, preemption was required to protect
"the congressional goal of a unified federal body of labor-contract law," id. at 220, and the fact
that a plaintiff or a state chose to label the claim as a tort rather than a contract violation did
not prevent the application of the preemption doctrine.
But Allis-Chalmers and Hechler are a far cry from this case because plaintiff here does not rely
on duties allegedly found in a contract. Instead, he places his entire reliance on tort duties
found outside the CBA, and it is the employer who seeks refuge in the contract to exempt
itself from duties that would otherwise be imposed on it by independent state laws. Therefore,
the need to pass on the validity of this defense does not transform Stikes' claim from a state
law privacy action to one seeking to enforce a CBA.
Indeed, the Lingle Court recognized that some CBA-related issues may have to be decided in
the course of litigating state law claims, without preempting the underlying cause of action
itself. This issue was anticipated in a footnote where the Court noted the possibility that a
state claim, which was nonwaivable under state law, might still be preempted because it was
actually waived by the parties to a CBA. Id. at 1883 n.9. According to the Court, before finding
such a waiver and thus confronting the question whether it would override state law, "we
would require 'clear and unmistakable' evidence, see Metropolitan Edison Co. v. NLRB, 460
U.S. 693, 708 (1983), in order to conclude that such a waiver had been intended." Id. The
Court did not say that the issue of whether a CBA waives state law involves the interpretation
of a CBA that arises under section 301 and so must be resolved by an arbitrator. Instead, the
Court indicated that waiver questions must be resolved by the courts -- "we would require
clear and convincing evidence."(6)
The Court made a similar point when discussing the possible need to refer to the CBA in order
to formulate the plaintiff's relief:
Although federal law would govern the interpretation of the agreement to determine the
proper damages, the underlying state law claim, not otherwise preempted, would stand. Thus,
as a general proposition, a state law claim may depend for its resolution upon both the
interpretation of a collective bargaining agreement and a separate state law analysis that does
not turn on the agreement. In such a case, federal law would govern the interpretation of the
agreement, but the separate state law analysis would not be thereby preempted.
108 S. Ct. at 1885 n.12.
Surely, if Lingle's need to refer to a CBA to establish her own claim for damages did not
compel preemption of her entire claim, then a defendant's claims that refer to the CBA do not
have a greater preemptive effect. For example, if an employer who is accused of retaliatory
discharge asserts that the discharge would have happened anyway pursuant to a right
allegedly enjoyed under the contract, that defense will not preempt the claim itself. E.g., Miller
v. AT&T Network Sys., 850 F.2d 543, 549-550 (9th Cir. 1988); Smolarek v. Chrysler Corp.,
858 F.2d 1165, 1171 (6th Cir. 1988). Therefore, the possibility of a defense based on the CBA
here does not preempt plaintiff's claim.
B. Chevron's principal argument below on the "preemption" issue was not really a preemption
argument in the sense that federal labor laws prevent California from extending privacy
protections to all unionized employees. Rather, Chevron argued that in this case, plaintiff's
claims had been properly waived by his union and in that sense are "preempted" by section
301. Chevron further argued that only an arbitrator can consider the validity of this claim, but
that this entire case must nonetheless be dismissed simply because a waiver defense has been
raised. In this section of the brief we explain the three reasons why the court below erred in
accepting this argument. First, this claim is not waivable as a matter of California law. Second,
the waiver question does not depend on the meaning of the CBA as that phrase was used in
Lingle, and so the Court must decide that question for itself rather than leaving the question
for an arbitrator; at the very least, even if the initial ruling on waiver is made by an arbitrator,
the Court should retain jurisdiction in the event that the arbitral decision permits prosecution
of the state law claim. Third, the Court should rule that there was no waiver.
1. Assuming that the Court does not abstain on the issue of whether Stikes' union could have
waived his rights under state privacy law, the Court should rule, in light of the state law cases
cited in the Introduction to the Argument in this brief, that it may not be waived as a matter
of California law. Although in Utility Workers Local 246, supra, and Laws v. Calmat, supra, the
Court declined to hold that privacy rights against drug-testing cannot be waived, those rulings
do not require a holding that Stikes' claim can be waived, for several reasons.
First, the Court decided not to find nonwaivability there in part because there were at that
time no published state court decisions establishing either that the privacy right would apply
to such drug-testing, or that such application could not be waived. By contrast, the privacy
claim in this case is directed not at urinalysis or similar drug-testing, but at the random search
of employees' automobiles, and numerous published California decisions, in a line of precedent
extending back 40 years, bar such random searches. E.g., People v. Gale, 46 Cal.2d 253, 257,
294 P.2d 13 (1956); Wirin v. Horrall, 85 Cal. App.2d 497, 504, 193 P.2d 470, 474 (1948).
Moreover, numerous decisions hold that employees may not be required to waive their rights
under California's constitution as a condition of employment. E.g., Long Beach City Employees'
Ass'n v. City of Long Beach, 41 Cal.3d 937, 951, 719 P.2d 660 (1986); Fire Fighters Local 55
v. City of San Leandro, 181 Cal. App. 3d 179, 182-183, 226 Cal. Rptr. 238 (1986). See also
Judson Steel Corp. v. Workers Compensation Appeals Board, 22 Cal.3d 658, 665 n.5, 150 Cal.
Rptr. 250 (1978) (statutory right could not be waived by CBA).
Second, an absence of published decisions on point would not be a sufficient basis for
preemption. When a federal court is required to decide a point of state law, and the fe
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March 10, 2016