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California Grocers Association v. City of Los Angeles

July 30, 2009


APPEAL from a judgment of the Superior Court of Los Angeles County, Ralph W. Dau, Judge. Affirmed. (Los Angeles County Super. Ct. No. BC351831).

The opinion of the court was delivered by: Kriegler, J.


A trade association of grocery store operators and suppliers brought an action challenging an ordinance enacted by the City of Los Angeles that required purchasers of large grocery stores to employ the prior store's workforce for 90 days. The trial court found the ordinance was preempted by the California Retail Food Code (CRFC), Health and Safety Code section 113700 et seq.,*fn1 based on the Legislature's express intent to fully occupy the field of health and sanitation standards for retail food facilities. Defendant City of Los Angeles and intervenor Los Angeles Alliance for a New Economy (LAANE) appeal from the judgment enjoining enforcement of the ordinance. The City and LAANE contend that the purpose of the ordinance is to provide job security to grocery workers in the event of a change in ownership, and the provisions are unrelated to health and sanitation standards. We conclude that the ordinance requires successor grocery employers to employ experienced workers in order to maintain health and safety standards at the store during the transition to new management. As such, the ordinance enters into a field fully occupied by state law and is preempted. In addition, we conclude that the ordinance is preempted by the National Labor Relations Act (NLRA) (29 U.S.C. § 151 et seq.). Therefore, we affirm.


The State Statutory Scheme

The CRFC is a comprehensive statutory scheme regulating health and sanitation standards for retail food facilities. The CRFC encompasses a wide range of provisions regulating food facilities, including building plan review (§ 114380), employee knowledge (§ 113947 et al.), food storage (§ 114047 et al.), and sanitation practices for equipment and utensils (§ 114095 et al.).

In section 113705, the Legislature expressly declared that ―the public health interest requires that there be uniform statewide health and sanitation standards for retail food facilities to assure the people of this state that the food will be pure, safe, and unadulterated. Except as provided in Section 113709, it is the intent of the Legislature to occupy the whole field of health and sanitation standards for retail food facilities, and the standards set forth in this part and regulations adopted pursuant to this part shall be exclusive of all local health and sanitation standards relating to retail food facilities.‖

Under section 113709, local governing bodies are permitted to adopt an evaluation or grading program for food facilities, to prohibit any type of food facility, to adopt an employee health certification program, to regulate consumer toilet and handwashing facilities, and to adopt public safety requirements concerning vending from vehicles.

The CRFC contains several provisions regulating employee knowledge of food safety. Food facilities that provide nonprepackaged potentially hazardous food must have an owner or employee who has passed an accredited food safety certification examination. (§ 113947.1, subd. (a).) ―A food facility that commences operation, changes ownership, or no longer has a certified owner or employee pursuant to this section shall have 60 days to comply with this subdivision.‖ (Id., subd. (e).)

In addition to the requirements for a certified owner or employees, all food employees must have adequate knowledge and be properly trained in food safety as it relates to their assigned duties. (§ 113947.) The certified owner or employee is responsible for ensuring that all employees who handle nonprepackaged foods have ―sufficient knowledge to ensure the safe preparation or service of the food, or both. The nature and extent of the knowledge that each employee is required to have may be tailored, as appropriate, to the employee's duties related to food safety issues.‖ (§ 113947.1, subd. (f).) A local government program that requires employees of a food facility to obtain approved food safety training or certification is enforceable only if the program existed prior to January 1, 1998, and only in the form that the program existed prior to January 1, 1998. (§ 113794.1, 113947.5)

The City's Grocery Worker Retention Ordinance

The Los Angeles City Council adopted the Grocery Worker Retention Ordinance on December 21, 2005. The purpose of the ordinance was stated expressly in Los Angeles Municipal Code (L.A.M.C.) section 181.00: ―Supermarkets and other grocery retailers are the main points of distribution for food and daily necessities for the residents of Los Angeles and are essential to the vitality of any community. The City has an interest in ensuring the welfare of the residents of these communities through the maintenance of health and safety standards in grocery establishments. Experienced grocery workers with knowledge of proper sanitation procedures, health regulations, and understanding of the clientele and communities they serve are instrumental in furthering this interest. A transitional retention period upon change of ownership, control, or operation of grocery stores ensures stabilization of this vital workforce, which results in preservation of health and safety standards. Through this ordinance, the City seeks to sustain the stability of a workforce that forms the cornerstones of communities in Los Angeles.‖

The ordinance applies to ―grocery establishments,‖ including: 1) retail stores over 15,000 square feet that sell primarily household foods for offsite consumption; and 2) retail stores with sales floors over 100,000 square feet that sell personal and household merchandise and use more than 10 percent of their sales floors for the sale of non-taxable merchandise. (L.A.M.C., §§ 181.01(E), 12.24(U)(14)(a).) Businesses that sell primarily bulk merchandise and require customers to pay a periodic fee are excluded from the regulation. (L.A.M.C., § 12.24(U)(14)(a).)

When control of a grocery establishment changes due to the sale or transfer of the assets or controlling interest, the ordinance requires the successor grocery employer to hire employees from a list of employees who worked at the store prior to the change in control, other than managerial, supervisory, or confidential employees. (L.A.M.C., §§ 181.01, 181.02(B).) If the successor employer needs fewer employees than its predecessor, the employees must be hired based on seniority or pursuant to the terms of a relevant collective bargaining agreement. (L.A.M.C., § 181.03(B).)

For 90 days after the establishment is fully operational and open to the public, the successor employer cannot discharge the employees hired under the ordinance except for cause. (L.A.M.C., §§ 181.03(A), (C).) At the end of the 90-day period, the employer must provide a written performance evaluation as to each employee. (L.A.M.C. § 181.03(D).) If the employee's performance was satisfactory, the employer must consider offering the worker continued employment. (L.A.M.C., § 181.03(D).) Workers may bring an action against the predecessor or successor employer, as appropriate, for violations of the ordinance, seeking reinstatement, front and back pay, value of lost benefits, and attorney fees. (L.A.M.C. § 181.05.)

Parties subject to the ordinance may execute a collective bargaining agreement that supersedes requirements of the ordinance. (L.A.M.C. § 181.06.)

Legislative History of the Ordinance

In July 2005, the city council requested that the city attorney prepare an ordinance that would extend existing permitting requirements and standards for public venues to supermarkets and provide for transitional worker retention to assure the maintenance of these standards when supermarket establishments change ownership. Ultimately, the ordinance focused solely on transitional worker retention.

The city attorney presented a report to the city council along with the draft of the grocery worker retention ordinance. The report concluded that the ordinance was not preempted by state or federal labor laws and discussed the rational basis for the ordinance. The report did not mention any state laws governing health and safety standards.

At a city council hearing on the proposed ordinance on December 14, 2005, the city attorney's representative explained that the City could use its police powers to regulate private industry in order to promote the health, welfare, and safety of its residents. The proposed transitional period for grocery store workers addressed the City's concern for sanitary procedures, the proper handling of food, and possibly the unique clientele of a specific store.

During the discussion of the ordinance, Council Member Alex Padilla emphasized the importance of maintaining stability in the workforce that ensures food is safe and sanitary. Council Member Janice Hahn approved of the ordinance's protection for grocery store workers. Her view was that the City should eventually protect workers in all industries that are commonly subject to buyouts and mergers.

Council Member Dennis Zine expressed concern that 90 days did not allow employees sufficient time to rearrange their lives and find other jobs. In response, the city attorney's representative explained that the ordinance was focused on health, safety, and welfare. The 90-day period in the ordinance was designed to ensure that workers employed during the transition would have ―familiarity and an understanding of sanitary procedures and other health and safety issues when it comes to grocery store[s] and handling food and possibly knowing, again, the clientele of that [] community. So, that's where the 90 days comes from again, is, this concern over health, safety and welfare. Do we have employees early on in this change of ownership who really know how to deal with health and safety issues pertaining to that type of business.‖ Council Member Zine reiterated his support for the ordinance simply on the basis of the protection it provided workers.

Council Member Bill Rosendahl offered his perception that two issues were at stake: health and safety concerns and workers' rights. He supported the ordinance for both reasons. Council Member Eric Garcetti spoke next to acknowledge that privately, he might share concerns for middle-class workers similar to those expressed by his colleagues, but as a public policy maker, his support for the ordinance was with ―very clear intent about the health and welfare of communities.‖ He cautioned that as public policy makers, they could not simply follow their hearts, but needed to be sure that the ordinance rested on secure legal ground. He asked the city attorney's representative to identify the ―rational basis‖ for the ordinance. The city attorney's representative explained the City's interest in ensuring that state and federal standards and county regulations regarding distribution of specific kinds of raw meat and produce are maintained. The representative concluded, as was stated in the city attorney's report, that the rational basis for the ordinance ―is to keep the industry knowledge for a transition period when the establishments change ownership so that that knowledge isn't lost when the personnel changes.‖

Council Member Tony Cardenas made general statements in support of grocery store workers and the importance of decent wages and benefits for workers. He endorsed the ordinance because it required companies to provide employees an opportunity to transition their employment ―in a legal way.‖

Council Member Bernard Parks commented on the unfairness of placing the entire cost burden for the employees on the new owner and no significant responsibility on the prior owner who had the relationship with the employees. He asked whether the ordinance could legally require the former owner to pay the employees' salaries for a portion of the 90-day period. The city attorney's representative opined that it was beyond the City's jurisdiction to enact such a requirement.

Council Member Parks asked whether the ordinance could be applied to all retailers. The city attorney's representative stated, ―We would be pleased to look at other scenarios; but, again, there would have to be an appropriate finding in order to support the use of the City's police powers for those other retail establishments.‖ The matter was put over for a second reading.

The final legislative hearing on the ordinance was held on December 21, 2005. Council Member Parks asked for the city attorney's opinion on a letter that the council had received from the California Grocers Association (CGA) arguing that the ordinance was defective, because it was not a valid exercise of the City's police power, was preempted by federal and state laws, such as labor laws, and violated the equal protection provisions of the state and federal Constitutions. The city attorney's representative responded that after looking at similar ordinances and case law, ―our office is prepared to aggressively defend this in the event of litigation.‖ Council Member Parks disapproved of the ordinance, because he believed it would discourage grocery stores from coming in to serve communities struggling to attract and retain grocery stores.

Council Member Padilla encouraged his colleagues to support the ordinance because ―[t]he health and safety of our residents are a big concern‖ and ―[t]his is a way to help strengthen the health and safety regulations within the City of Los Angeles.‖

Council Member Greig Smith expressed concern that the legality of the ordinance was not sufficiently clear and the City might incur a considerable financial burden to defend the ordinance if the city attorney had to bring in an outside consultant. In addition, he questioned the claim that the ordinance protected the health of the residents. The city attorney's representative responded, ―To answer your last question, the ordinance doesn't set forth any additional regulations on health and safety. It does work to preserve the industry knowledge of the existing laws, so that when the personnel transitions from store to store, that industry knowledge is retained.‖ Council Member Smith argued that compliance with laws governing proper handling of produce, dairy, and meat, to protect health and safety, was already monitored by the county health department. The city attorney's representative responded, ―But the county health department doesn't require workers to retain the knowledge during a transition. This specifically addresses that moment when the stores change hands.‖ The city attorney's representative explained the ordinance was a precautionary measure to ensure that grocery stores complied with county health regulations. Council Member Smith characterized the justification as weak and believed the ordinance would be a disincentive for grocery stores to experiment in underserved communities.

Council Member Zine reiterated his concern that the ordinance did not guaranty that the workers would be retained after the 90-day period and instead allowed them to be replaced with a new workforce that did not have to be represented by a union. The city attorney's representative agreed with Council Member Zine's assessment of the limits of the protection afforded workers under the ordinance and added that ―within those [90] days, the new owner would have an opportunity to be training the new workforce, if the new owner wanted to replace the existing workforce after that [90] days. That new workforce, during the [90] days, with adequate training, would be in a better position to safeguard the public's health, safety, and welfare.‖ Council Member Zine expressed his support of the ordinance, although he considered 90 days insufficient time for employees to make plans for their future.

Council Member Rosendahl asked the city attorney's office to explain the health and safety aspects of the retention plan again. The city attorney's representative stated, ―If we consider this under a rational-basis test, which the courts would likely apply, the government's legitimate concern is preserving the health and safety of its citizens through the proper handling of food-meat, produce, et cetera-following [state, federal,] and county regulations. By preserving the industry knowledge from the incumbent grocery employer's personnel to the successor grocery employer's personnel, we are maintaining those health and safety standards.‖ Council Member Zine expressed his support for grocery store workers. He urged approval of the measure and stated, ―This gives a little more dignity to the process of mergers and acquisitions. Ninety days isn't the end of the world for anybody who is on the corporate side, but it does give a worker at least a chance to think about his future and his life. [¶] I know we are not considering it from that perspective; it's health and safety. But their health and safety matters to me as well.‖

Council Member Hahn described the type of health and safety knowledge that grocery store employees gain through experience, stated that she would not want to shop at a grocery store that did not retain the predecessor's employers, and expressed support for the measure. Council Member Jose Huizar stated that, as an attorney, ―we all know that [] health and safety [is] a term of art in the legal sense and its often used to regulate commerce, whether it's by cities or the state or the federal government.‖ He argued that the 90-day period would not affect an employer's ability to do business significantly, but would provide reassurance to the families of grocery workers in the event of a change of ownership, and offered his support of the ordinance.

In closing remarks, Council Member Parks noted that the City spends approximately $30 million annually for the services of outside counsel. If the ordinance created litigation likely to require outside counsel, it would add to the already significant cost of the City's legal fees. In his opinion, businesses would not be hurt by the ordinance, because they would simply choose to locate outside the City, and it would be the community that was hurt by the ordinance.

The ordinance was approved, with 11 council members voting in favor and two council members voting against it.

Procedural History

On May 4, 2006, plaintiff and respondent CGA filed a complaint against the City seeking to enjoin enforcement of the ordinance on the grounds that it was preempted by state and federal labor laws, violated the equal protection provisions of the state and federal Constitutions, and was preempted by the provisions of the Health and Safety Code. CGA filed an amended complaint adding allegations of standing.

On August 16, 2006, LAANE intervened to defend the ordinance.

A bench trial took place on August 1 and 2, 2007. On February 11, 2008, the trial court entered the judgment declaring the ordinance void, because it entered a field that is fully occupied by and conflicts with state law, specifically the CRFC. The court declared that the ordinance was also void because it violated the equal protection provisions of the federal and state Constitutions. The judgment enjoined the City from enforcing the ordinance. The City and LAANE filed timely notices of appeal.


State Preemption

The City and LAANE contend that the ordinance is not preempted by the CRFC, because the purpose of the ordinance is to protect the job security of grocery store workers, as evidenced by the operative provisions of the ordinance and the legislative history, without any relation to health and safety standards. Their interpretation of the ordinance is unpersuasive.

The California Constitution allows cities and counties to ―make and enforce within [their] limits all local, police, sanitary, and other ordinances and regulations not in conflict with general [state] laws.‖ (Cal. Const., art. XI, § 7.) An ordinance that conflicts with state law is preempted and void. (O'Connell v. City of Stockton (2007) 41 Cal.4th 1061, 1065 (O'Connell).)

―An ordinance can conflict with state law in any of several ways: A conflict exists if the local legislation duplicates or contradicts general law or if the local legislation attempts to enter an area fully occupied by general law. (O'Connell, supra, 41 Cal.4th at p. 1067.) An area can be ‗fully occupied by general law' either because the Legislature has expressly prohibited further local legislation or because the state legislative scheme implies such a prohibition. (Ibid.)‖ (Tosi v. County of Fresno (2008) 161 Cal.App.4th 799, 804.)

―If the subject matter or field of the [local] legislation has been fully occupied by the state, there is no room for supplementary or complementary local legislation, even if the subject were otherwise one properly characterized as a ‗municipal affair.' [Citations.]‖ (Lancaster v. Municipal Court (1972) 6 Cal.3d 805, 808.) Statutory construction and the determination of legislative intent are questions of law that we review de novo. (Bravo Vending v. City of Rancho Mirage (1993) 16 Cal.App.4th 383, 391-392 (Bravo).)

The Legislature has expressly stated its intent to fully occupy and exclusively regulate the field of health and sanitation standards for retail food facilities, including employee knowledge of food safety, with only limited exceptions. The City's grocery worker retention ordinance is ...

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