The Ninth Circuit ruled in favor of a District Judge’s opinion saying that the city of Oakland, California cannot ban Oakland Bulk & Oversized Terminal, LLC (OBOT) from their proposed operations in a breach of contract lawsuit. Oakland claimed the operation would pose a health or safety risk and tried to stop it.
The judges sided with the Northern District of California decision that the City of Oakland breached an agreement in their decision that coal could not be transported through the terminal. “After an announcement that coal would be transported through the terminal, the City held public hearings, passed an ordinance and adopted a resolution that barred coal at the facility, citing a provision in the parties’ agreement that allowed it to impose new regulations,” the opinion said.
The city signed the Development Agreement with OBOT in 2013 and OBOT began a sublease of the property in 2014. After the news that coal would be shipped through the terminal, Oakland held a public hearing and considered expert reports, eventually leading them to block OBOT from using the terminal for coal transportation, causing OBOT to file the lawsuit against Oakland in 2016.
The Ninth Circuit decision came from a three-judge panel including Judges Carlos T. Bea, Kenneth K. Lee, and Lawrence L. Piersol. They reviewed the case as a breach of contract dispute instead of an administrative law proceeding and found that the city lacked evidence to claim a substantial safety risk.
“We do not opine on the ultimate issue of any alleged health or safety impact of OBOT’s proposed plan. Nor do we judge the economic or environmental merits of the Agreement to develop a commercial terminal that may house and transport coal. Rather, we affirm, under a clearly erroneous standard of review, the district court’s bench trial ruling that Oakland breached the Agreement,” the opinion said.
Judge Piersol filed a dissent stating that the trial court made an error in considering evidence not submitted to Oakland about health and safety effects of coal on nearby residents. Piersol said he would reverse the district court opinion and that a reasonable person would accept the city’s conclusion that coal handling and storage could be harmful to community members.
Oakland Bulk and Oversized Terminal, LLC, was represented by Quinn Emanuel Urquhart and Sullivan.
