UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT AIRLINES FOR AMERICA, No. 22-15677

Plaintiff-Appellant, D.C. No. 3:21-cv- 02341-EMC v. CITY AND COUNTY OF SAN OPINION FRANCISCO,

Defendant-Appellee.

Appeal from the United States District Court for the Northern District of California Edward M. Chen, District Judge, Presiding

Argued and Submitted April 21, 2023 San Francisco, California

Filed August 29, 2023

Before: Mary M. Schroeder, Consuelo M. Callahan, and Patrick J. Bumatay, Circuit Judges.

Opinion by Judge Callahan; Dissent by Judge Schroeder 2 AIRLINES FOR AMERICA V. CITY & COUNTY OF SAN FRANCISCO

SUMMARY *

Preemption

The panel reversed the district court’s grant of summary judgment in favor of the City and County of San Francisco in an action challenging the City’s Healthy Airport Ordinance, which requires airlines that contract with the City to use San Francisco International Airport to provide employees with certain health insurance benefits. Federal law generally preempts state or local government action that has the force and effect of law. But when a state or local government buys services or manages property as would a private party, it acts as a market participant, not as a regulator, and courts presume that its actions are not subject to preemption. Airlines for America, a representative of the airlines, alleged that the City, in enacting the ordinance and amending SFO’s contract with the airlines, acted as a government regulator and not as a market participant, and the ordinance therefore was preempted by multiple federal statutes. The district court held that the City was a market participant and granted its motion for summary judgment. The Healthy Airport Ordinance contains a civil penalty provision authorizing the Airport Director to impose daily fines, with discretion to increase the amount of the fines. The ordinance also contains a civil penalty provision authorizing the City to collect liquidated damages. The City * This summary constitutes no part of the opinion of the court. It has been prepared by court staff for the convenience of the reader. AIRLINES FOR AMERICA V. CITY & COUNTY OF SAN FRANCISCO 3

can seek to enforce these provisions in a municipal administrative proceeding. Reversing and remanding, the panel held that the two civil penalty provisions carried the force of law and thus rendered the City a regulator rather than a market participant. Dissenting, Judge Schroeder wrote that, in amending SFO’s contract with the airlines, the City acted as a market participant and at most included a contractual penalty clause that might be unenforceable.

COUNSEL Shay Dvoretzky (argued), Parker Rider-Longmaid, and Hanaa Khan, Skadden Arps Slate Meagher & Flom LLP, Washington, D.C.; Jason D. Russell, Zachary M. Faigen, and Mitchell A. Hokanson, Skadden Arps Slate Meagher & Flom LLP, Los Angeles, California; Patricia N. Vercelli and Riva Parker, Airlines for America, Washington, D.C.; for Plaintiff-Appellant. Melissa C. Allison (argued), Scott P. Lewis, Austin P. Anderson, Paul M. Kominers, and Annie E. Lee, Anderson & Kreiger LLP, Boston, Massachusetts; Wayne K. Snodgrass, Deputy City Attorney; David Chiu, City Attorney; San Francisco City Attorney’s Office, San Francisco, California; for Defendant-Appellee. Dolores Bastian Dalton, Goldfarb & Lipman LLP, Oakland, California, for Amici Curiae League of California Cities and California State Association of Counties. 4 AIRLINES FOR AMERICA V. CITY & COUNTY OF SAN FRANCISCO

OPINION CALLAHAN, Circuit Judge:

The City and County of San Francisco (the City) owns and operates San Francisco International