Cardinal Towing & Auto Repair, Inc. v. City of Bedford

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 98-10194

CARDINAL TOWING & AUTO REPAIR, INC.;
DAVID MATOKE, Individually,

Plaintiffs-Appellants,

versus

CITY OF BEDFORD, TEXAS, a Municipal Corporation;
RICK HURT, Mayor of City of Bedford in his official
and individual capacity; BECKY GREIN, City Council
Member in her official and individual capacity; LISA
DALY, City Council Member in her official and
individual capacity; STEPHEN PEAK, City Council
Member in his official and individual capacity;
CHARLES OREAN, City Council Member in his
official and individual capacity; DANNY MCDOWELL,
City Council Member in his official and individual
capacity; LEAHMON CHAMBERS, City Council
Member in his official and individual capacity;
JIM R. SIMPSON, Chief of Police in his official
and individual capacity; B&B WRECKER SERVICES, INC.,

Defendants-Appellees.

Appeal from the United States District Court for the
Northern District of Texas

July 22, 1999

Before GARWOOD, DAVIS and DeMOSS, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiffs-appellants Cardinal Towing & Auto Repair, Inc. and
its owner David Matoke (collectively, Cardinal) sued defendants-

appellees—the City of Bedford, Texas, the members of the City

Council, the City’s Police Chief and B&B Wrecker Services, Inc.

(all appellees collectively, the City)—complaining of the City’s

1995 towing ordinance and the 1996 award of the City’s towing

contract thereunder to defendant-appellee B&B Wrecking Services,

Inc. (B&B). The suit alleged preemption by 49 U.S.C. § 14501(c) and

intentional racial discrimination. The district court granted

summary judgement for the City. We affirm.

Facts and Procedural History

The City of Bedford—located outside of Fort Worth—has a

population of about 45,000. The Bedford police have the authority

to call tow trucks to remove vehicles on public streets that are

abandoned or disabled in accidents. These “police tows” were

historically handled using a rotation system. Local towing

companies that applied and met certain requirements were placed on

a police list, and a police tow job would go to the company whose

turn it was. The towed vehicle would be stored at the tower’s lot

and the owner would ultimately pay for the service. For a number

of reasons, in November 1995 the City decided to abandon this

system and instead contract with a single company to perform all of

the tows requested by the City police. Accordingly, the City

repealed the previous statutory scheme and passed the here-

challenged ordinance directing that the City’s non-consensual City

2
police tows be handled by the recipient of the contract with the

City. As before, the owner of the vehicle would actually pay for

the service. The ordinance did not affect non-consensual tows

requested by private property owners—property owners remained free

to strike agreements with any towing company they wished; 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.1 The ordinance thus limited itself to

purely non-consensual situations in which the Bedford police

requested a tow.

The City drafted contract specifications and solicited bids.

The evidence demonstrates that none of the City defendants were

aware at the time these specifications were drafted that David

Matoke was an African-American (or of the race of the owner(s) of

B&B). Applicants were required to comply with a number of

requirements, the most significant of which were a guarantee of

response time within fifteen minutes and access to a class eight

wrecker. Class eight wreckers are large towing vehicles able to

remove tractor trailer trucks. Cardinal, B&B and another company

submitted bids to the City. Cardinal’s bid stated it was “minority

owned.” Cardinal averred below that it had “made arrangements to

acquire” a class eight wrecker and stated in its bid that it would

take some time to put the wrecker in service. In the interim, it

1
Nor did the ordinance apply to tows requested by, for example,
state police officers.

3
stated that it would be able to call on a class eight wrecker owned

by another company, Beard’s Towing. A letter from Beard’s was

attached, in which access to a wrecker was confirmed. However, the

letter reflects that Beard’s was only able to guarantee a response

time averaging forty-five minutes to an hour. The City Council

in February 1996 voted to award the contract to B&B. The members

of the City Council testified that at that time they were unaware

of the race of either Matoke or B&B’s owner(s). After the award of

the contract, Cardinal protested, claiming that it had been

discriminated against. In the wake of these allegations, the City

decided to rebid the contract. The second set of bid

specifications contained some additional requirements, including

ownership of a class eight wrecker, maintenance of an office at the

company’s vehicle storage facility, and computerized record

keeping. The specifications were later amended by raising the

required insurance level. Cardinal’s second bid stated that it was

in the process of acquiring a class eight wrecker and suggested

usage of Beard’s in the interim. Cardinal also claimed that it was

in the process of establishing compliance with the computerized

records and office at the storage location requirements and both

would be completed a month and a half after the bid was submitted.

The City Council in September 1996 again awarded the contract

to B&B. Cardinal filed suit in the Northern District of Texas on

February 19, 1997, requesting a declaratory judgement that the

City’s police tow contracting ordinance constituted regulation

4
related to the price, route, or service of a motor carrier with

respect to the transportation of property and was thus preempted

under 49 U.S.C. § 14501(c). The complaint also sought damages for

intentional racial discrimination under section 1981 and section

1983. On November 4, 1997, the City filed for summary judgement.

Cardinal responded by moving for partial summary judgement on the

preemption issue. On January 9, 1998, the district court granted

summary judgement for the City. This appeal followed.

Discussion

We review a district court’s grant of summary judgment

employing the standard of review it employed. Dutcher v. Ingalls

Shipbuilding, 53 F.3d 723, 725 (5th Cir. 1995). Summary judgment

must be affirmed when the non-moving party has failed to

demonstrate that a material issue of fact is present. In reviewing

the record, we must view all facts in the light most favorable to

the nonmovant. We review questions of law de novo. Id.

Cardinal’s first and principal argument (to which the vast

majority of its brief is devoted) is that the district court erred

in refusing to find the Bedford ordinance preempted under federal

law. It claims that the ordinance and the contract awarded

pursuant to it constituted regulation or a provision having the

force and effect of law governing ground transportation, and is

thus barred under the express preemption clause contained in 49

U.S.C. § 14501(c). The City claims that the ordinance was not

5
regulation, but rather an ordinary contracting decision of a

proprietary nature and thus is outside the scope of section

14501(c) preemption. In the alternative, the City argues that if

the ordinance is regulation, it is exempted from preemption under

section 14501(c)(2)(A)’s exemption for safety related regulation.

We find it unnecessary to address the application of the exemption,

since we conclude that the City’s actions here were proprietary and

did not constitute the type of regulation covered in the statute’s

preemption clause. We also find that Cardinal’s race

discrimination claim lacks merit.

I. Preemption by 49 U.S.C. § 14501(c)

Under the Supremacy Clause of the Constitution, “the Laws of

the United States . . . shall be the supreme Law of the Land . . .

any Thing in the Constitution or Laws of any State to the Contrary

notwithstanding.” U.S. Const. Art. VI, cl. 2. Federal law

preempts state law under the clause whenever 1) Congress has

expressly preempted state action, 2) Congress has installed a

comprehensive regulatory scheme in the area, thus removing the

entire field from the state realm, or 3) state action directly

conflicts with the force or purpose of federal law. See Hodges v.

Delta Airlines, Inc., 44 F.3d 334, 335 n.1 (5th Cir. 1995) (en

banc). Preemption of municipal ordinances is governed under the

same standards as would apply to a state law. See Wisconsin Pub.

Intervenor v. Mortier, 11 S.Ct. 2476, 2482 (1991). However, when

6
preemption is invoked to prevent a state or municipality from

wielding its traditional police powers, congressional intent to

displace that authority must be “clear and manifest.” See

California v. ARC America Corp., 109 S.Ct. 1661, 1665 (1989). The

setting of the terms and conditions governing municipal contracts

constitutes a traditional police power. See Atkin v. State of

Kansas, 24 S.Ct. 124, 127 (1903).

In 1994, Congress moved to deregulate the motor carrier

industry. Central to this effort was a section preempting most

state and local regulation. See 49 U.S.C. § 14501(c) (codifying

the FAA Authorization Act of 1994, Pub.L. No. 103-305, § 601(c), as

amended by the ICC Termination Act of 1995, Pub.L. No. 104-88 §

103). Cardinal maintains that the City’s actions are preempted by

this provision due to a conflict both with the statute’s express

preemption clause and the spirit of the statute. The statute

establishes that “a State . . . may not enact or enforce a law,

regulation, or other provision having the force and effect of law

related to a price, route, or service of any motor carrier . . .

with respect to the transportation of property.” 49 U.S.C. §

14501(c)(1). The 1995 amendment—which specifically referenced

towing—indicates that towing companies performing nonconsensual

tows are “motor carriers.” See 49 U.S.C. § 14501(c)(2)(C)

(establishing limited exemption for price regulation of “for-hire

motor vehicle transportation by a tow truck”). Cf., e.g., 426

7
Bloomfield Avenue Corporation v. City of Newark, 904 F.Supp. 364

(D.N.J. 1995) (concluding under pre-amendment law that tow trucks

are not within terms of the clause). It is also clear that the

ordinance and contract are “related” to the route and service of

a motor carrier “with respect to the transportation of property.”

Barring the successful invocation of one of the statute’s

exemptions, then, the City’s actions would appear to be expressly

preempted.

The City argues, however, that its actions are not regulatory,

and thus cannot be preempted. The clause only preempts a “law,

regulation, or other provision having the force and effect of law.”

The City maintains that the ordinance and contract specifications

here were designed only to procure services that the City itself

needed, not to regulate the conduct of others. Such innocuous

market participation, it maintains, does not constitute a law,

regulation, or provision having the force and effect of law under

section 14501(c). We agree.

A. Proprietary action and Boston Harbor

The law has traditionally recognized a distinction between

regulation and actions a state takes in a proprietary capacity—that

is to say, actions taken to serve the government’s own needs rather

than those of society as a whole. This distinction is most readily

apparent when the government purchases goods and services its

operations require on the open market. Thus while the dormant

8
commerce clause prevents state interference with interstate

commerce, a state is allowed to favor its own citizens when it acts

as a “market participant” and not a regulator of third parties.

See, e.g., White v. Massachusetts Council of Construction

Employers, Inc., 103 S.Ct. 1042, 1044-45 (1983) (municipality’s

requirement that fifty percent of workers on City-funded

construction project be residents of the City did not automatically

violate the dormant commerce clause). This distinction has been

recognized in preemption cases. The Supreme Court has found that

when a state or municipality acts as a participant in the market

and does so in a narrow and focused manner consistent with the

behavior of other market participants, such action does not

constitute regulation subject to preemption. See Building and

Construction Trades Council v. Associate Builders and Contractors

of Massachusetts/ Rhode Island, Inc., 113 S.Ct. 1190, 1196 (1993)

(“Boston Harbor”) (preemption not applicable). When, however, a

state attempts to use its spending power in a manner “tantamount to

regulation,” such behavior is still subject to preemption. See

Wisconsin Department of Industry, Labor and Human Relations v.

Gould, 106 S.Ct. 1057, 1062-63 (1986).

States have methods of influencing private conduct unrelated

to the state’s proprietary functions—and thus potentially

disrupting a congressional plan—at their disposal that extend

beyond traditional overt regulation. One such method is deployment

9
of a state’s spending power in a manner calculated to encourage or

discourage such private behavior. In Gould, the Court announced

that attempts to leverage the spending power to achieve regulatory

goals could trigger preemption. The action challenged in Gould was

a Wisconsin statute that barred the state from contracting with

employers who had been repeatedly sanctioned by the NLRB. The

state conceded that this requirement was instituted primarily to

deter labor law violations generally, and the statute allowed for

the bar to be triggered solely by misconduct that occurred on

contracts performed outside the state on behalf of parties other

than the state itself. Moreover, the provision applied to all of

the state’s future contracting decisions, not just a particular job

where labor peace was at a premium. See Gould, 106 S.Ct. at 1061-

62. It was thus not difficult to conclude that the state’s actions

were “tantamount to regulation” and thus subject to preemption

under the NLRA. As the Court later noted in Boston Harbor, the

state’s actions in Gould could only be understood as an “attempt to

compel conformity with the NLRA” that was “unrelated to the

employer’s performance of contractual obligations to the State.”

Boston Harbor, 113 S.Ct. at 1197.

Following the logic of Gould, courts have found preemption

when government entities seek to advance general societal goals

rather than narrow proprietary interests through the use of their

contracting power. Thus attempts by government entities to punish

10
labor and benefits practices they disfavor by withholding contract

work have been found preempted by the NLRA and ERISA. See Chamber

of Commerce of United States v. Reich, 74 F.3d 1322, 1339 (D.C.

Cir. 1996) (executive order that barred federal government from

contracting with companies that permanently replaced striking

workers was preempted by the NLRA); Air Transport Association of

America v. City and Council of San Francisco, 992 F.Supp. 1149,

1179 (N.D. Ca. 1998) (city ordinance barring contracts with

employers that did not offer domestic partner benefits to its

entire workforce was preempted by ERISA—city admitted that

combating discrimination was ordinance’s primary goal and its terms

reached well beyond interaction with the city); Van-Go Transport

Co., Inc. v. New York City Board of Education, 1999 WL 323277 at *9

(E.D.N.Y) (policy of refusing to conditionally certify replacement

workers that was applied to all of department’s student transport

contracts was preempted under NLRA). See also Keystone Chapter

Associated Builders and Contractors, Inc. v. Foley, 37 F.3d 945,

955 n.15 (3d Cir. 1994) (noting in dicta that proprietary exception

could not save minimum wage rule for state contracts since private

parties would not ordinarily embrace a policy that increased the

cost of contracting without regard to particular circumstances).

Most government contracting decisions do not constitute

concealed attempts to regulate, however. In order to function,

government entities must have some dealings with the market. While

11
the leverage a state can exert through its spending power and the

absence of a true profit motive to restrain government action may

create a temptation to take advantage of these interactions to

pursue policy goals, the presence of the state in the market cannot

automatically be assumed to be motivated by a regulatory impulse.

Given the volume of, and obvious need for, interaction between the

government and the private sector, the application of preemption in

a manner that hobbles state and local governments’ purchasing

efforts threatens severe disruption.

Boston Harbor recognized this reality. In Boston Harbor, the

Court confronted a situation in which a state agency was under a

judicial order to complete a project within a set time frame. To

prevent time-consuming work stoppages, the agency agreed to employ

a union workforce in exchange for a no-strike guarantee. The Court

distinguished Gould and found that such proprietary action was not

subject to preemption by the NLRB. It found that the agency had

focused on the government’s own interests—uninterrupted completion

to assure compliance with the court order—and had done so by

striking the type of labor bargain a private company might have

sought in similar circumstances. In contrast to the state’s

admitted desire to encourage labor compliance as a general matter

in Gould, the agency was only “attempting to ensure an efficient

project that would be completed as quickly and effectively as

possible at the lowest cost.” Boston Harbor, 113 S.Ct. at 1198.

12
Significantly, the state’s action was limited to a particular job,

and did not penalize bidders for practices on different projects

for other clients. See id. at 1197 (noting Gould “addressed

employer conduct unrelated to the employer’s performance of

contractual obligations to the State”). Under these circumstances,

the Court found that the agency’s actions were not “tantamount to

regulation” and thus not subject to preemption under the NLRA.

Courts have similarly shielded contract specifications from

preemption when they applied to a single discreet contract and were

designed to insure efficient performance rather than advance

abstract policy goals. See Associated General Contractors of

America v. Metropolitan Water District of Southern California, 159

F.3d 1178, 1183 (9th Cir. 1998) (requirement that contractors on

project adhere to a particular collective bargaining agreement that

included benefit package was not preempted by ERISA); Colfax v.

Illinois State Toll Highway Authority, 79 F.3d 631, 634-35 (7th

Cir. 1996) (requirement that contractor adhere to area collective

bargaining agreement was not preempted by NLRA); Minnesota Chapter

of Associated Builders and Contractors, Inc. v. County of St.

Louis, 825 F.Supp. 238, 243-44 (D. Minn. 1993) (county’s

requirement that bidders for jail construction contract agree to

labor agreement that set benefit levels but also contained

nonstrike clause not preempted by ERISA).

B. Proprietary nature of the City’s actions

13
 Here, the City acted as a typical private party would act in

seeking a towing service, and preemption should not apply. In

distinguishing between proprietary action that is immune from

preemption and impermissible attempts to regulate through the

spending power, the key under Boston Harbor is to focus on two

questions. First, does the challenged action essentially reflect

the entity’s own interest in its efficient procurement of needed

goods and services, as measured by comparison with the typical

behavior of private parties in similar circumstances? Second, does

the narrow scope of the challenged action defeat an inference that

its primary goal was to encourage a general policy rather than

address a specific proprietary problem? Both questions seek to

isolate a class of government interactions with the market that are

so narrowly focused, and so in keeping with the ordinary behavior

of private parties, that a regulatory impulse can be safely ruled

out. Since the answer to both questions here is affirmative, this

case is at least on the surface firmly within the realm of Boston

Harbor’s permissible proprietary action.

The City’s ordinance and contract specifications had an

obvious connection to the City’s narrow proprietary interest in its

own efficient procurement of services. Selecting a single company

to perform the City’s tows clarified responsibility, minimized

administrative confusion, and allowed for the setting and easy

supervision of a unitary quality standard for that particular work

14
for the City. The specifications in the contract were also

obviously related to efficient towing—the key provisions dealt with

the City’s core speed and reliability concerns, and the other

requirements dealt with the type of administrative and legal issues

that would be of interest to a private entity—insurance and record

keeping. In light of these facts, Cardinal does not claim, and we

cannot find any suggestion, that the City was doing anything else

other than setting specifications that would insure the efficient

performance of the contract with the City for City police tows.2

2
This narrow focus on the practical can be contrasted with
another Texas municipality’s approach to tow trucking. See Harris
County Wrecker Owners For Equal Opportunity v. City of Houston, 943
F.Supp. 711, 730 (S.D. Tex. 1996). In Harris, the court faced a
licensing scheme governing both consensual and nonconsensual tows
throughout the City. A portion of the scheme governed the type of
police tows at issue in this case, requiring parties to obtain a
special licence—the number of which were limited—before being
eligible to conduct such tows. The district court ultimately found
these provisions were preempted. Licencing schemes do not invite
proprietary analysis. Cf. Golden State Transit Corp. v. City of
Los Angeles, 106 S.Ct. 1395, 1398 (1986) (City’s threat to bar taxi
licence renewal in order to influence labor dispute was preempted)
with Boston Harbor, 113 S.Ct. at 1196 (distinguishing Golden State
and noting a different case would be presented if the City used
taxi services to transport City workers). The general regulatory
impulse behind the portions of the Harris ordinances dealing with
police tows was in any case obvious given the licensing format and
industry-wide scope of the ordinance as a whole. Given this, it is
hardly surprising that the City in Harris did not argue that its
actions were proprietary and thus shielded from preemption. That
issue was neither before the Harris court nor addressed by it. We
note, however, that the Harris court found that the “primary
motivations” behind the police tow licence scheme were “economics,
community development, and social policies.” Harris, 943 F.Supp.
at 729. The dominance of these factors in the scheme was
demonstrated by the fact that only ten percent of applicants were
rejected on the grounds of ability and experience, while fifty-
three percent were rejected due to a policy of racial preferences

15
There is no indication that it was trying to generally encourage

the possession of class eight wreckers the way the state in Gould

sought to encourage compliance with the NLRA or the City in Air

Transport sought to encourage domestic partnership benefits.

Nor do the scope of the ordinance and contractual

specifications at issue here call into question the proprietary

character of the City’s actions. Unlike the attempts of other

municipalities to deal with tow truck issues, the City here limited

itself only to true nonconsent tows where the owner of the vehicle

was unwilling or unable to specify a towing company. Cf. R. Mayer

of Atlanta, Inc. v. City of Atlanta, 158 F.3d 538, 540-41 (11th

Cir. 1998) (permit required for all tows within city); Ace Auto

Body & Towing, Ltd. v. City of New York, 171 F.3d 765, 768-69 (2d

Cir. 1999) (rates capped for all tows within city, general

licencing requirements imposed on all companies, and system set

limiting tows from the scene of an accident to selected companies

even if vehicle owner requested another independently). And as in

Boston Harbor—but unlike Gould—the specifications here looked

and the applicants’ failure to meet more nebulous goals such as
community development. Id. at 731-32. While private parties might
choose to take into account such factors, the ever present
temptation to leverage the spending power and thus intrude on
congressional design is such that the proprietary exception should
be reserved for more archetypical market behavior. See Boston
Harbor, 113 S.Ct. at 1197 (noting that while private companies
might choose to participate in a boycott, such action would trigger
preemption if it was engaged in by the state). The presence of
such factors in Harris might have created an inference of
regulatory intent had the question been addressed.

16
only to the bidder’s dealings with the City. Cardinal’s failure to

guarantee its other customers access to a large wrecker or service

within fifteen minutes would have had no impact on its bid if the

City had been satisfied it would receive such service. Cf. Reich,

74 F.3d at 1338 (noting effect of executive order would be to force

any corporation that hoped to do business with the government to

refrain from hiring replacement workers on all of its projects).

Finally, the contract specifications here did not apply to all City

contracts going forward, but only a single contract for police

tows. See Boston Harbor, 113 S.Ct. at 1198 (noting contract was

“specifically tailored to one particular job”). If, for example,

the City struck an agreement for the movement of furniture and

records to a new government office, the bidding moving companies

would not be forced to obtain a class eight wrecker. Taken

together, the limited scope here decisively forecloses an inference

that the City sought to change the tow truck industry as a whole,

let alone influence society at large.

C. Application of Boston Harbor to § 14501(c)

The City’s actions here thus would seem clearly entitled to

shelter under Boston Harbor—as narrowly focused exercises of a

proprietary function, they are not subject to preemption. While no

case to our knowledge has specifically applied Boston Harbor to

section 14501(c), such an application is fully consistent with its

reasoning. And while § 14501(c), unlike the NLRB, has an express

17
preemption clause, so does ERISA. Indeed, the language of ERISA’s

preemption clause is almost identical to the text here. See 29

U.S.C. § 1144(a) (preemption of state law “as they may now or

hereafter relate to any employee benefit plan”); § 1144(c)(1)

(defining state law as “all laws, decisions, rules, regulations, or

other State action having the effect of law”). Cf. 49 U.S.C. §

14501(c) (preemption of any “law, regulation or other provision

having the force and effect of law”).3 Courts have had little

difficulty finding that proprietary state action does not “have the

effect of law” under ERISA and thus does not fall within the terms

of express preemption. See Associated General Contractors, 159

F.3d at 1183 (finding that Boston Harbor “applies just as strongly

here, for ERISA itself carefully distinguishes between state action

in general and state action which has the effect of law”). We find

that the same analysis applies under § 14501(c). Not only does the

text of the statute allow for a proprietary analysis, by excluding

government actions without the force of law it seems to invite it.4

3
To the extent that there is any textual difference between the
sections, ERISA’s preemption would appear broader. It explicitly
references rules and decisions as well as laws and regulations, and
only requires that “other State Action” have the “effect” of law,
while § 14501(c) requires “force and effect”. See 29 U.S.C. §
1144(c)(1); 49 U.S.C. § 14501(c).
4
Cardinal also relies on the amendment to § 14501(c) that
allowed price regulation of non-consent tows. See 49 U.S.C. §
14501(c)(2)(C) (codifying amendment contained in the ICC
Termination Act of 1995, Pub.L. No. 104-88 § 103). The amendment
indicates that explicit regulation of the price of nonconsensual
tows (including those ordered by private property owners) was

18
 Nor does the spirit and purpose of section 14501(c) mandate a

different result. Section 14501(c), to be sure, is a deregulatory

statute that seeks to encourage market forces. See, e.g., House

Conf. Rep. No. 103-677, reprinted in 1994 USCCAN 1676, 1758-59

(purpose of statute is elimination of state and local regulation

that reduces competition and curtails expansion of markets). But

the free play of market forces was also the congressional

prescription for the area of labor law at issue in Boston Harbor.

See Boston Harbor, 113 S.Ct. at 1198. And as the Court noted

there—quoting the dissenting opinion of now Justice Breyer

below—when a state acts in a proprietary fashion and contracts as

a private party would, “it does not ‘regulate’ the workings of the

market forces that Congress expected to find; it exemplifies them.”

Id. at 1199 (quoting 935 F.2d 345, 361 (1st Cir. 1991) (en banc)

(Breyer, C.J., dissenting)). Allowing a city to contract for city-

ordered towing services would seem a prime example of this

phenomenon. Because the owner of the vehicle will by necessity be

permitted. Cardinal argues that the allowance of price regulation
implicitly forbade the City’s actions here. But because the
amendment applied to private nonconsensual tows, and because it
referred to the concept of regulation in a manner consistent with
the original language, see id. (allows “law, regulation, or other
provision” related to price), it is impossible to assume that
Congress specifically considered the issue before us and meant to
implicitly foreclose even proprietary nonprice governmental action
in this area. Preemption of traditional police powers will not be
inferred unless congressional intent is clear and manifest. See
California v. ARC America Corp., 109 S.Ct. 1661, 1665 (1989).
Given this requirement, we cannot say that the amendment acts to
bar the City’s proprietary action.

19
unable to choose a towing company in nonconsent situations, the

only party that can make the type of merit selection inherent in

market transactions is the party ordering the tow. In the

situations addressed by the ordinance, that party is the City, and

by its choosing the company best able to guarantee fast, reliable

towing service, the City exemplifies the market forces Congress

sought to encourage.

The return to the prior rotation system urged by Cardinal, in

contrast, would require the City to hand out towing contracts to a

pool of applicants regardless of their relative merits. Such an

arrangement is rare in the private sector, and not exactly a

paradigm of laissez faire. This is especially true since the logic

of Cardinal’s preemption argument would seem, if accepted, to

prevent a municipality from setting threshold standards for entry

into the rotational pool. If the City cannot require fast response

and heavy towing capacity in forming a single contract, it would

seem it would also be barred from imposing a similar requirement on

parties seeking to enter the pool. The upshot would be a system in

which neither the owner nor the party ordering the tow, when that

party is the City, could exercise a meaningful choice between

competing providers. Whatever such a system might look like, it

assuredly would not resemble the normal workings of a competitive

market that Congress sought to encourage. Barring a showing of

special circumstances—which Cardinal failed to allege or

20
demonstrate—it appears that the City’s actions are not only fully

compatible with Congress’ desire to foster a free market in ground

transportation, they are far more in its spirit than Cardinal’s

suggested alternative.5

D. The City as a consumer of towing services

Cardinal argues that the City’s actions here constitute

regulation because the City is not really contracting as a consumer

of towing services at all—the owner of the vehicle towed, not the

party ordering the tow, is the real consumer. This argument has

some intuitive resonance. When a police tow occurs, the owner of

the vehicle rather than the City pays for the service. The City is

not utilizing its spending power at all. It thus could be argued

that however skillfully the City has tried to cast the issue in

contractual terms, the reality here is the classic regulatory

situation of the government imposing itself, without any direct

interest, on the interactions between two private parties. However,

5
Cardinal has failed to argue or allege that the structure of
the Bedford towing industry involves special circumstances
justifying deviation from our general analysis. There may be
municipalities in which police tows constitute such an overwhelming
portion of the industry that failure to share in the municipality’s
business forecloses effective competition in other segments of the
industry. However, in other municipalities the size of the police
tow segment may be such that mechanical rotation regardless of
merit would merely atrophy incentives to improve service and leave
the private sector inadequately provided for. As the record here
furnishes no basis for such an analysis, and Cardinal has made no
argument in that respect, we do not address the matter. We do not
suggest that undertaking such an analysis would, or would not, be
appropriate, or, if so, in what circumstances, if any, it might
justify departure from our general section 14.501(c) preemption
analysis as to City-ordered nonconsensual tows.

21
this argument ignores the odd structure of the towing industry.

While a portion of the industry functions on quintessential market

lines—the type of consensual tow where one calls a truck to have a

broken-down car taken to the repair shop—the nonconsensual tows at

issue here do not.

As we noted earlier, nonconsensual tows do not involve any

opportunity for market interaction on the part of the owner of the

vehicle. The real decision is made by the party who ordered the

tow, who chooses both to remove the vehicle and the party to

perform the service. And whether the ordering party is the City or

a private property owner, it seeks out this service in the pursuit

of its own interests. For property owners, that interest is

typically the freeing of a parking space.6 For the City, it is the

need to maintain traffic flow in the wake of an accident and remove

abandoned vehicles blighting their environment. In both cases this

interest is hardly abstract. Both need the service performed—if

the City were unable to contract with private parties, it would

presumably have to purchase and deploy its own tow trucks. And

both have a very real desire to obtain the best service possible.

They will accordingly select the fastest and most reliable towing

company that they are aware of, and towing companies will compete

for their business.

6
And the vehicle owner frequently is the party liable for the
towing cost in such situations. See, e.g., Texas Trans. Code Ann.
§§ 684.012(a), 684.001(1), and 684.053(a)(2).

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 This structure, while somewhat distorted by the fact a third

party gets left with the bill, is in its relevant essentials an

ordinary market for services. When a private property owner

requests the removal of a car from its lot, it is a consumer of

towing services and the company it selects is a provider. The

owner of the vehicle, who did not request and most likely did not

desire this “service,” can of course also be viewed as a consumer

(and often is also liable for the tow costs, see note 6, supra).

But in this oddly bifurcated market, the party requesting the tow

is undeniably also acting as a consumer, and when the City requests

a tow it should be treated as a consumer. We are convinced that

the City’s role here is of a proprietary nature, notwithstanding

the fact that a third party pays for the service.

For the reasons stated, we hold that the City’s actions here

did not constitute regulation or have the force and effect of law.

Accordingly, they are not preempted by section 14501(c). This

makes it unnecessary for us to determine whether the statute’s

preemption exemption for safety regulations, see 49 U.S.C. §

14501(c)(2)(A), can be invoked by municipalities, an issue that has

created a split between the circuits in cases involving true

regulation. See Ace Auto Body & Towing, Ltd. v. City of New York,

171 F.3d 765, 775 (2d Cir. 1999) (safety exemption applies and

shields bulk of municipal regulation from preemption); R. Mayer of

Atlanta, Inc. v. City of Atlanta, 158 F.3d 538, 545-48 (11th Cir.

23
1998) (terms of statute allow only state, and not municipality, to

shelter under exemption). We also need not determine whether the

ordinance and contract provisions here were sufficiently motivated

by or related to public safety concerns to be eligible for the

section 14501(c)(2)(A) exemption.

II. Racial Discrimination

Cardinal also claims that the City discriminated against it

because its owner, David Matoke, is an African-American. The

specifications were manipulated to exclude it from consideration,

Cardinal maintains, and the contract was awarded to B&B even after

Cardinal demonstrated it met the heightened specifications. A

claim under § 1983 of racial discrimination in hiring is evaluated

under the standards of Title VII. See Tanik v. Southern Methodist

University, 116 F.3d 775 (5th Cir. 1997). Cardinal concedes that

there is no direct evidence of discrimination here. To survive

summary judgement in a case based on an inference of discriminatory

intent, a plaintiff must establish a prima facie case. To

establish a prima facie case, it must be shown that the plaintiff

was a member of a protected group who applied for a position he was

qualified for, was denied, and the position was awarded to a party

outside of the plaintiff’s class. See Davis v. Chevron U.S.A.,

Inc., 14 F.3d 1082, 1087 (5th Cir. 1994). If the plaintifff

establishes a prima facie case, the burden shifts to the defendant

to demonstrate a permissable alternative motivation, which, if

24
established, the plaintiff then bears the burden of rebutting. Id.

The City claims that Cardinal has failed to make out a prima

facie case of racial discrimination because Cardinal was not

qualified under the contract specifications. This appears to be

correct. Both the original and second specifications required the

bidding companies to have access to a class eight wrecker and to

guarantee service within fifteen minutes. Nothing in the

specifications indicates that class eight wrecker service was

exempted from the fifteen-minute requirement. While Cardinal’s

arrangement with Beard’s provided it with access to a large

wrecker, the letter from Beard’s attached to Cardinal’s submission

was very clear in claiming that service would take, on average,

forty-five minutes to an hour. Thus Cardinal could not guarantee

service within fifteen minutes and was not qualified under the

original specifications.7 The additional requirements added when

7
Cardinal highlights the fact that it promised to obtain a
wrecker soon after the contract was awarded. However, the fact
that Cardinal felt it necessary to include Beard’s availability in
its submission reflects that the City would have been exposed to
substandard service for a period of time. And the City was not
required to accept Cardinal’s general promise of future compliance.
See Davis, 14 F.3d at 1087 (applicant for heavy labor position was
not qualified due to serious knee injury, despite his claim that
injury would heal within a few months). Had Cardinal explained
that it had actually made firm arrangements to purchase the wrecker
as soon as the contract was awarded, and enclosed agreements or
other documentation showing that the sale could proceed
immediately, a materially different situation might be presented.
However, the bid proposals in the record do not contain any such
specifics or any supporting documentation in that regard (although
full documentation on other vehicles is included).

25
the contract was rebid merely reinforced the fact that Cardinal was

unqualified. They required computerized records and an office

located at the storage facility, and while Cardinal promised to

fulfill these conditions, it did not meet either at the time it

submitted its bid. The second bidding also required ownership of

a class eight wrecker, which made Cardinal’s reliance on Beard’s as

a stopgap insufficient.

The district court focused on Cardinal’s failure to meet the

qualifications of the second bid. Under those terms, Cardinal did

not qualify and thus no prima facie case was established. Cardinal

argues that this focus is in error, claiming that its failure to

qualify was caused by the City’s purposeful tailoring of the

specifications for the second bid to exclude it. It attempts to

paint the City’s actions here as similar to the manipulation of

voting requirements after African-Americans received the franchise,

or a scenario the Supreme Court has mentioned in which a City

rezones property to prevent the development of housing for African-

Americans. See Village of Arlington Heights v. Metro Housing, 97

S.Ct. 555, 564 (1977).

But those examples are readily distinguishable. In both,

African-Americans would have been entitled to what they sought but

for the government’s alteration of the standard. Under those

circumstances, and when the change is clearly tied to the arrival

of minority claimants on the scene, an inference that the change is

26
motivated by discrimination is easily drawn. And application of a

standard that may have been motivated by racial animus cannot

shield a government entity from a discrimination claim. Here, in

contrast, Cardinal was not qualified under the original

specifications, which were drawn up before the City was aware of

Matoke’s race (or of that of the owner(s) of B&B). Whatever

spurred the change, it surely could not have been racial animus,

since the City could have satisfied any urge to exclude Matoke

under the original rules. Accordingly, application of the second

bid standards is proper, and since Cardinal did not qualify under

that standard no prima facie case was created. The district court

thus properly dismissed Cardinal’s racial discrimination claims.

Conclusion

The district court’s judgment is accordingly

AFFIRMED.

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