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Ninth Circuit Upholds City’s Living Wage

Friday June 18, 2004

In a 2-1 decision, the Ninth Circuit Court of Appeals ruled Wednesday that the City of Berkeley does have the right to demand businesses at the marina pay their workers a living wage. 

The decision was the latest in an ongoing battle between the city, proponents of the living wage, and Skates by the Bay restaurant, which has objected to the city’s attempt to impose the living wage law. 

The court’s decision can now be appealed by Skates’ parent company, RUI One Corporation, to a hearing en banc, which would place the case in front of an 11 judge Ninth Circuit Court, or directly to the U.S. Supreme Court. 

According to RUI One Corporation’s attorney, Zachary Wasserman, of Wendell, Rosen & Black LLP, the company is currently “analyzing what to do now,” but is “disappointed with the results” of the court’s ruling. 

The living wage ordinance in question was originally passed by the city in June of 2000 and forced employers doing business with the city or leasing property from the city to pay their employees a living wage, which at the time was determined to be $9.75 per hour plus an additional $1.62 if the employer did not cover health benefits. The amount has subsequently been raised to $10.75 with benefits, or $12.55 without. 

The law was amended in September 2000 to include businesses in the marina zone which employed six or more employees and generated $350,000 or more in annual gross receipts. The City Council said they included the marina because it is public trust land and wanted to ensure businesses were not able to exploit the privilege of using the land, while receiving city resources, and then escape the duty of paying their employees a living wage. 

The fight for a living wage and then the subsequent marina amendment have been brought to the City Council by the East Bay Alliance for a Sustainable Economy (EBASE), a non-profit organization made up labor, community, and faith-based organizations concerned with poverty and economic equity in the East Bay. 

Skates by the Bay has become the focal point of the fight because other Berkeley Marina businesses including Hs Lordship’s and the Radisson Hotel have unionized labor. 

RUI has argued that the city’s attempt to impose the living wage law at the marina creates an unconstitutional change of the 50-year lease between RUI and the city. But according to city attorney Manuela Albuquerque, the Ninth Circuit court found that the ordinance did not change the lease, and instead showed the lease holds the business subject to city law. 

RUI also argued before the Ninth Circuit that the law created a denial of equal protection, claiming that the marina was being singled out. Because the city cited their contributions to the marina as part of the reason for demanding a living wage, RUI argued that all other areas in Berkeley that have also received city money for improvement and development should be held to the same standards, such as the fourth street area. 

The court did not uphold this argument either, stating, “It is more than reasonable that the city should expect marina businesses, which receive so many benefits from the city in the form of improvements and lack of competition due to the development moratorium, and which operate on land held in the public trust, to contribute to the welfare of the surrounding community and not to exacerbate its problems.”  

The third and final argument, which was also overturned by the court, was a claim of denial of due process. 

The Ninth Circuit decision is not the first one won by the city. Back in March 2001, the city also won a decision in a U.S. District Court that upheld the city’s right to impose the living wage. According to city Attorney Manuela Albuquerque, that decision allowed the city to demand the restaurant comply or have their contract terminated.  

But through an appeal to the Ninth Circuit Court, she said, the restaurant forced the city to stay their ability to enforce the lease provision. In the meantime, however, the U.S. District Court has forced the restaurant to pay the difference between current wages and living wage wages into escrow until the case is officially finished.  

According to Wasserman, RUI’s attorney, the amount paid into escrow each year before the living wage was recently raised was around $121,000 a year. Since it has been raised, he estimated that amount to be around $135,000 a year. Martha Benitez, the lead organizer with EBASE, said she suspects that the amount is even more.  

Many cheered the decision by the Ninth Circuit but have said they know the battle could continue if RUI appeals. Councilmember Kriss Worthington, the councilmember who introduced the original living wage proposal to council, said the decision helps build momentum for those fighting for a living wage around the country. 

“I think a living wage should be the policy for employees in the whole country,” he said. “Winning this one little part of Berkeley is one small step for having a living wage for employees in Berkeley and beyond. It’s not a giant victory, but it’s one small step.” 

Benitez from EBASE said the decision is a positive step in a fight that she says is more about big business than legal technicalities. 

“The fight has been really about a multi-billion dollar national corporation refusing and denying their employees the right to a living wage,” she said. “Basically this a huge company that with impunity since 2001 has taken it upon themselves to break the law.”  

“We are very pleased about the decision because it sets yet another strong president for the living wage movement. It defends the right of the city to expect some minimum standards and decent wages from their corporate citizens.”