Opinion
Civil Action No. SA-96-CA-1285-EP.
April 3, 2000.
ORDER
On this date the Court considered the parties' renewed motions for summary judgment, filed at this Court's request in light of a recent Fifth Circuit ruling on this matter. After careful consideration, the Court will issue the following Order finding that the City of San Antonio may (1) prohibit a disabled vehicle operator from requesting tow services other than those provided by a company with which the City has contracted; (2) prohibit the Plaintiffs from offering their towing services on City streets where the City has taken control of the situation; and (3) prohibit the Plaintiffs from towing disabled vehicles from the scene of a collision, whether or not the vehicle operator is able to select a towing company.
Procedural History
Plaintiffs filed this lawsuit against Defendant City of San Antonio, seeking a declaration that the City of San Antonio's Wrecker Code section 19-391(a) and City Ordinance 77716 are preempted by 49 U.S.C. § 14501(c) to the extent that they prevent the Plaintiffs from competing for jobs involving towing, removing, o hauling vehicles from City public streets. Plaintiffs also brought 42 U.S.C. § 1983 and antitrust claims. Texas Towing Corporation intervened in the suit, arguing, with the City, that the City's scheme was not preempted and did not violate civil rights law or antitrust law.
On August 25, 1998, this Court entered an Order granting partial summary judgment to the Plaintiffs on the issue of whether federal law preempted the City's towing scheme and enjoining the City from continued operation under the scheme. In addition, the Court granted summary judgment in favor of the City and Intervenor on the Plaintiffs' civil rights claim and on a claim for money damages arising from violations of antitrust law. The Court denied summary judgment on the Plaintiffs' request for injunctive relief based on antitrust violations.
The parties jointly requested that the Court sever and render judgment on the preemption question and certify the question for interlocutory appeal, so that the parties could take the issue to the United States Court of Appeals for the Fifth Circuit. By orders and a judgment issued September 21, 1998, and October 13, 1998, respectively, the Court granted the requests. On appeal, however, the Fifth Circuit found that the Court's unjustified certification for interlocutory appeal was insufficient. See Stucky v. City of San Antonio, No. 98-50934, at 3 n. 2 (finding insufficient basis for interlocutory appeal) and at 4 n. 4 (suggesting it has no jurisdiction over certified matters by noting that it "also" has no jurisdiction over denial of summary judgment) (5th Cir. January 14, 2000). That court vacated this Court's improperly certified rulings, apparently on their merits, and ordered that this Court reconsider its conclusions in light of the Fifth Circuit's 1999 decision in Cardinal Towing and Auto Repair, Inc. v. City of Bedford, Texas, 180 F.3d 686
Accordingly, this Court ordered the parties to address the merits of the preemption issue in light of Cardinal Towing. That issue (specifically as it relates to "consent" tows) is, for the present, the only issue before the Court.
Cardinal Towing
The holding in Cardinal Towing significantly limits this Court's renewed consideration of the preemption issue. In that case, the Fifth Circuit expressly found it "unnecessary to address the application of [exemptions] to the federal law at issue because it concluded that "the City's actions were proprietary and did not constitute the type of regulation covered in the statute's preemption clause." Cardinal Towing, 180 F.3d at 690. The limited question in Cardinal Towing, then, was whether a city's decision to contract with a single towing operator was proprietary or whether it was regulatory and thus subject to preemption by federal law prohibiting states from regulating the price, route, or service of a motor carrier with respect to the transportation of property. See 49 U.S.C. § 14501(c)(1).
In light of the relatively limited scope of Cardinal Towing, this Court sees no reason to revisit its views regarding whether the City's scheme is generally preempted by federal statute and whether any such preemption is saved by statutory exemption or exception. Rather, the Court will focus its attention on whether the City's actions are regulatory or proprietary. See Cardinal Towing, 180 F.3d at 690. In other words, the Court will examine the evidence presented to determine whether the City intended to regulate its towing industry and is thus subject to the preemption doctrine or whether it desired only "to procure services that [it] itself needed" and may thus proceed as a private consumer in the marketplace. Id. at 691
In determining whether an action is proprietary or regulatory, the Court focuses on two inquiries. Id. at 693. First, the Court must determine whether the challenged action reflect the City's own interest in the efficient procurement of necessary goods and services, as "measured by comparison with the typical behavior of private parties in similar circumstances." Id. Second, the Court must determine whether the narrow scope of the challenged action defeats an inference that its foremost objective was to regulate an industry rather than address its own specific proprietary problem. Id.
In Cardinal Towing, the Court considered the ordinance and towing contract specifications of Bedford City, Texas. Bedford City, like San Antonio, had opted to move to a system whereby it hired a single company to handle its non-consent tows. The City solicited bids, asking applicants to comply with several requirements, including a guarantee of response time within fifteen minutes and access to a wrecker large enough to remove tractor trailer trucks. The City settled on a company, and Cardinal Towing then filed suit, alleging preemption and race discrimination.
The Fifth Circuit held that the City's actions had an "obvious connection" to its narrow proprietary interest in procuring services. Id. at 693. In reaching this conclusion, the court noted that the system clarified responsibility, minimized administrative confusion, and allowed for the setting and easy supervision of a unitary quality standard for City tows. Id. The Court said that the specifications laid out by the City in the bidding process evinced the City's core, proprietary concerns of efficiency and reliability. Id.
Next, the court stated that the scope of the City's ordinance and contractual specifications were sufficiently narrow to reflect purely proprietary concerns. Id. at 694. The Court noted that the single-tow system came into play only where the owner of the disabled vehicle was unwilling or unable to specify a towing company. Id. In addition, the Court noted that the City's contract specifications pertained only to the bidder's work for the City, not to its other contracts, and only to City contracts for police tows, not to other City contracts. "Taken together, " the Court stated, "the limited scope here decisively forecloses an inference that the City sought to change the tow truck industry as a whole, let alone influence the City at large." Id.
Plaintiffs point to a factual difference between this case and Cardinal Towing that, according to the Plaintiffs, mandate a different result in this case. The Plaintiffs note that in Cardinal Towing, the ordinances and specifications at issue dealt only with non-consent tows. In fact, the Fifth Circuit itself expressly noted this distinction: "The ordinance did not affect non-consensual tows requested by private property owners — property owners remain free to strike agreements with any towing company they wish, nor did it affect situations in which the owner of a disabled car was available and expressed a preference for a particular company at the scene of the accident." Cardinal Towing Auto Repair, 180 F.3d at 689 (emphasis added).
The City's response that it had, by ordinance, defined all City tows as nonconsensual is problematic. In the first place, the State of Texas has defined consent and non-consent tows by statute. See TEX. TRANS. CODE § 643.201(e) (defining "consent tow" as a tow made with the consent of the owner or operator and "non-consent" tow as a tow made without the consent of the owner or operator of the vehicle"). The second place, the City cannot, by sleight of hand (or language) simply eliminate the concerns addressed by the inquiry regarding whether a tow is consensual or nonconsensual. In taking up that question, the Fifth Circuit was attempting to determine whether the City of Bedford's ordinance and contractual specifications "called into question the proprietary character of the City's actions" Cardinal Towing, 180 F.3d at 694. It cannot be the case that simply redefining what a consent tow is eliminates that concern. Therefore, the City's case, as the Intervenor implicitly acknowledges, must rise or fall on the assumption that its ordinances pertain to both consent and nonconsent tows, as such tows are defined by state statute.
The Court has considered this question carefully. In asking this Court to review its previous rulings in light of Cardinal Towing, the Fifth Circuit gave no indication of how it felt that case should be applied to these facts. The Court must admit that it has some reservations regarding whether the consent/nonconsent distinction is dispositive. In ultimately concluding that the Fifth Circuit did not mean it to be so, the Court has attempted to focus on what it believes is the ultimate concern, as delineated in Cardinal Towing, which is whether the scope of the ordinances here "decisively foreclose an inference that the City sought to change the tow truck industry as a whole, let alone influence society at large." Id. at 694. The Court must conclude that such an inference is foreclosed.
The City ordinances deal exclusively with City-directed tows; there is no effort by the City evidenced in the record to affect the conditions under which tow operators conduct their business otherwise. The City's policies do not reach the general towing industry or the availability of wreckers, the proper equipment, or response time required outside City-directed tows. While the City's scheme does include consent tows, the City has argued that the inclusion narrowly addresses its proprietary concerns — swift and efficient removal of disabled vehicles from City streets. The City argues that, given the large size of the City, permitting non-incapacitated individuals to call their own tow companies would inevitably increase the time necessary to clear the streets, because it will take longer for tow operators to reach the site of the accident than it might in a smaller town or city. The Court cannot say that these concerns are not legitimate and certainly cannot say that they mask a desire on the part of the City to regulate its private towing companies.
Thus, the Court concludes that the City of San Antonio is not regulating an industry but is instead addressing its own proprietary interests in the efficient and swift removal of disabled vehicles from City streets. Therefore, the City's ordinances are not preempted. As the Court understands the present posture of this matter, this resolution leaves one issue remaining — the question of whether the Plaintiffs are entitled to injunctive relief based on alleged federal antitrust violations. While the City addressed that claim in its motion for summary judgment, the Plaintiffs did not do so (nor were they required to do so by this Court's order for briefing). Therefore, the Court will Order that the Plaintiffs rcspond to the City's arguments on the issue within fourteen days from the date of this Order or notify the Court they do not intend to pursue the claim.
ACCORDINGLY, it is ORDERED that the Defendant's and Intervenor's motions for suimmary judgment (Docket Nos. 78 and 79) are GRANTED, IN PART, such that Plaintiffs' claims regarding whether the City's scheme of contracting with a single towing company for the purpose of removing disabled vehicles from City streets are DISMISSED. The motions are DENIED, IN PART, to the extent that they raise the question of whether Plaintiffs are entitled to injunctive relief for alleged antitrust violations. It is further ORDERED that Plaintiffs' motion for partial summary judgment (Docket No. 81) is DENIED. It is finally ORDERED that, within fourteen days of the date of this Order, Plaintiffs shall respond to Defendant's arguments regarding the antitrust claim or shall notify the Court that they no longer intend to pursue that claim.