Unpublished Disposition, 876 F.2d 897 (9th Cir. 1989)

MEMORANDUM^* 

United Cab Cooperative appeals the dismissal of its action under 42 U.S.C. § 1983 for violation of its civil rights in connection with the City of Oakland's failure to renew its taxicab permits. The district court dismissed the action, with its pendent state claims, for failure to state a claim under Fed. R. Civ. P. 12(b) (6). We affirm.

This court reviews the dismissal of a complaint for failure to state a claim under Fed. R. Civ. P. 12(b) (6) de novo. For dismissal to be justified it must appear that the plaintiffs would not be entitled to relief under any set of facts that could be proved. In re Financial Corp. of America Shareholder Litigation, 796 F.2d 1126, 1128 (9th Cir. 1986).

The district court held that, taking the plaintiffs' factual allegations as true, the plaintiffs had not stated a claim for deprivation of property without due process because, under applicable law, the plaintiffs had no property interest in the renewal of their taxicab licenses. The district court determined that the municipal ordinances of the City of Oakland governing the granting and renewal of taxicab licenses vested unlimited discretion in the chief of police to grant or deny licenses on the basis of his evaluation of vehicles' safety, and that plaintiffs thus had no entitlement to renewal of their permits. The appellants contend that the regulatory scheme enacted by the City of Oakland does give rise to a legitimate entitlement to renewal of their licenses in that it only allows denial of renewal for failure to comply with specific written safety standards.

The Supreme Court has held that a property interest in a benefit protected by the due process clause arises from a legitimate claim of entitlement created and defined by an independent source, such as state or federal law. Board of Regents v. Roth, 408 U.S. 564, 577 (1972); Perry v. Sindermann, 408 U.S. 593, 599-602 (1972). "A person's interest in a benefit is a 'property' interest for due process purposes if there are ... rules or mutually explicit understandings that support his claim of entitlement to the benefit and that he may invoke at a hearing." Perry v. Sindermann, 408 U.S. at 601. Thus, we must inquire whether the Oakland Municipal Code provides the plaintiffs with a legitimate expectation of entitlement, that is, whether it contains mandatory language that restricts the discretion of the police chief to deny renewal of taxi permits, or whether it in fact vests wide discretion in the police chief. See Jacobson v. Hannifin, 627 F.2d 177, 179-80 (9th Cir. 1980) (question whether Nevada gaming statute gave rise to a legitimate expectation of entitlement to license to act as a landlord depended upon whether it contained mandatory language); Erdelyi v. O'Brien, 680 F.2d 61, 63 (9th Cir. 1982) (question whether California dangerous weapons control statute created a property interest in concealed weapons licenses depended upon extent to which the statute contained mandatory language that restricted the discretion of the issuing authority).

The provisions of the Oakland Municipal Code governing the renewal of taxi permits are set forth at OMC ch. 5, Art. 14. Section 5-14.031 of the Oakland Municipal Code provides that:

Every owner's permit issued pursuant to section 5-14.03 [governing initial issuance of taxi licenses] shall expire one (1) year after date of issuance, or renewal, unless the same is renewed for an additional period of one (1) year by the Police Department. Application for such renewal shall be made in conformity with, and shall contain such information as may be required by, rules prescribed by the Chief of Police.

Section 5-14.032 of the Oakland Municipal Code states that:

The owner of a taxicab or ambulance shall obtain one Taxicab and Ambulance Identification Emblem issued by the Police Department for each said public motor vehicle to be operated in the city of Oakland, when, to the satisfaction of the Chief of Police, said owner is in possession of a valid City of Oakland permit for each said public motor vehicle, and the vehicle meets such inspection standards as the Chief of Police may require. (emphasis added).

It is clear from the language of the ordinance that the Oakland Municipal Code itself does not place any limits on the discretion of the chief of police in establishing requirements for renewal of permits. However, under Board of Regents v. Roth and Perry v. Sindermann, "mutually explicit understandings" between the parties can also furnish an independent source for a constitutionally protected property interest. See Perry, 408 U.S. at 599-603.

The appellants' contentions that the chief of police had fostered an understanding that the licenses were renewable in perpetuity are based upon a memorandum by Police Chief Hart. Police Chief Hart's memorandum stated that "permit renewal is accomplished by completion of a public motor vehicle (taxicab) inspection to ensure compliance with state, county, and municipal regulations." Appellants argue that, under the procedures outlined in this memo, the sole requirements for renewal were payment of annual fees and annual submission of a vehicle meeting objective, non-discretionary, written inspection standards. These contentions are without merit.

The Police Chief's memorandum merely states that vehicle inspections are required for permanent renewals; it does not purport to limit the authority of the inspectors to apply unwritten safety standards. This language is not an explicit representation that inspection standards were limited to those set forth in written regulations, or that the standards would only be modified in writing.

The plaintiffs also allege that the police department's consistent practice of requiring only compliance with explicit brake and light standards gave rise to a protected property interest. Under both Perry v. Sindermann and Board of Regents v. Roth, 408 U.S. 564, 577 (1972), decided the same day as Perry v. Sindermann, only an explicit representation by the police department, not an implied representation arising out of their prior practice, can give rise to a property interest. The major distinguishing factor between Roth, in which a non-tenured faculty member was held not to have a property interest in continued employment, and Perry, in which a non-tenured faculty member was held to have a property interest in continued employment, was that in Perry the college administration had made an explicit representation to the plaintiff. See Perry, 408 U.S. at 600. In Perry, the college's official faculty guide stated that:

Odessa College has no tenure system. The Administration of the College wishes the faculty member to feel that he has permanent tenure as long as his teaching services are satisfactory....

In Roth, in contrast, the Court rejected the plaintiff's contention that a property right to continued employment on the faculty arose because in practice most professors were rehired. See Roth, 408 U.S. at 578 & n. 16. The Court stated that:

[T]here [was not] any state statute or University rule or policy that secured [the plaintiff's] interest in re-employment or that created any legitimate claim to it.... To be sure, the respondent does suggest that most teachers hired on a year-to-year basis by Wisconsin State University-Oshkosh are, in fact, rehired. But the District Court has not found that there is anything approaching a "common law" of re-employment, see Perry v. Sindermann, ... so strong as to require university officials to give the respondent a statement of reasons and a hearing on their decision not to rehire him.

Id. (citations omitted).

The plaintiffs' expectation that the police department inspectors would continue to inspect only for compliance with specific brake and light standards was merely a unilateral expectation. Board of Regents v. Roth, 408 U.S. 564, 577 (1972). It was not a mutually explicit understanding which rose to the level of a protected property interest. The district court is AFFIRMED.