Rui One Corp. v. City of Berkeley

371 F.3d 1137, 2004 WL 1336657

• Court: Court of Appeals for the Ninth Circuit
• Decided: June 16, 2004
• Docket: No. 02-15762
• Status: Published

Opinions

Opinion by Judge Wardlaw; Dissent by Judge Bybee

WARDLAW, Circuit Judge:

As the cost of living skyrockets around the country, and in the San Francisco Bay Area in particular, the face of American poverty is changing dramatically. More and more frequently, full-time, minimum-wage workers are unable to support their families’ basic needs. See Jim Newton, L.A.’s Growing Pay Gap Looms as Political Issue Poverty, L.A. Times, Sept. 7, 1999, at A1 (“Today’s poverty icon is a working mother, toiling eight hours or more a day at a job that does not pay enough to cover the rent, clothe the baby or provide a life of even minimal comfort.”). Recognizing the plight of its own working poor, the City of Berkeley, California, has joined dozens of other cities nationwide to help bridge the gap between federal and state laws setting the minimum wage — the real value of which has decreased over the past few decades — and the costs of modern urban living by enacting “living wage” ordinances. These ordinances require certain employers to pay their employees wages approximating the real cost of living in the locality, which is often significantly higher than the applicable state or federal minimum wage. Although these ordinances routinely exempt smaller or less profitable employers from their coverage, they do increase labor costs for affected employers.

We must decide whether Berkeley’s Living-Wage Ordinance, Berkeley Ordinance No. 6548-N.S. (2000) (creating Berkeley Municipal _ Code ch. 13.27), amended by Berkeley Ordinance No. 6583-N.S. (2000) (“Marina Amendment”), violates the Contract Clause of the United States Constitution, the Equal Protection Clause of the United States and California Constitutions,' or the state and federal Due Process Clauses' as an impermissible delegation of legislative power to unions. Reviewing the constitutionality of the local ordinance de novo, see 4805 Convoy, Inc. v. City of San Diego, 183 F.3d 1108, 1113 (9th Cir.1999), we hold that Berkeley’s, Living Wage Ordinance, as amended, survives these constitutional challenges. Accordingly, we affirm the decision of the district court denying RUI One Corporation’s (“RUI”) summary judgment motion and entering judgment in favor of the City of Berkeley.

I.

A. Minimum Wage Laws and Living Wage Ordinances

Minimum wage legislation was introduced into the American legal scene early in the twentieth century, as part of broader efforts to improve working conditions and regulate the employment of vulnerable groups (e.g., recent immigrants, women, and children). See generally William P. Quigley, ‘A Fair Day’s Pay For a Fair Day’s Work’: Time to Raise and Index the Minimum Wage, 27 St. Mary’s L.J. 513, 515-29 (1996); see also id. at 516 (noting California’s 1913 minimum wage statute). Although the United States Supreme Court struck down some of the earliest minimum wage statutes under its now-defunct economic due process analysis, e.g., Adkins v. Children’s Hosp., 261 U.S. 525, 43 S.Ct. 394, 67 L.Ed. 785 (1923) (minimum wages for women and children in particular industries in Washington, D.C.), it eventually upheld their validity in West Coast Hotel Co. v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 81 L.Ed. 703 (1937) (upholding State of Washington’s women and minors minimum wage statute), a case now viewed as the death knell of heightened constitutional scrutiny for economic legislation.

The federal government joined in this growing effort, at first unsuccessfully with the National Industrial Recovery Act in 1933, but finally in 1938 with the enactment of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 (“FLSA”). See Quig-ley, supra, at 521-29. The FLSA explicitly recognized that in setting national minimum wages in certain industries, it did not intend to usurp the power of states and municipalities to set higher minimum wages, or to set minimum wages in industries not targeted in the FLSA. See 29 U.S.C. § 218(a) (“No provision of this chapter or of any order thereunder shall excuse noneompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter....”).

Since its enactment, eleven states, including in this Circuit Alaska, California, Hawaii, Oregon, and Washington, have enacted minimum wage laws setting statewide wages above the federal minimum. See United States Dep’t of Labor, Minimum Wage Laws in the States.1 Like their federal counterpart, however, these statewide laws contain exemptions for certain industries. See id. n. 1. Of significance to the question before us, several of these state laws expressly contemplated further wage regulation by individual localities, including in California, whose state constitution grants municipalities broad legislative power. See Cal. Const, art. XI, § 7; Cal. Lab.Code § 1205(b) (“Nothing in this part shall be deemed to restrict the exercise of local police powers in a more stringent manner.”).

In the 1960s, certain municipalities, including Baltimore, New York City, and Washington, D.C., began enacting minimum wage ordinances, often preceding statewide legislative action. See McMillen v. Browne, 14 N.Y.2d 326, 251 N.Y.S.2d 641, 200 N.E.2d 546 (1964) (upholding New York City ordinance); Mayor of Baltimore v. Sitnick, 254 Md. 303, 255 A.2d 376 (1969) (Baltimore); D.C.Code Ann. §§ 32-1001 to -1015. More recently, localities around the country, beginning with Baltimore in mid-1996, have begun refocusing their efforts to enact new ordinances, setting wages and employee benefits higher than either federal or state mínimums. Localities in California joined this trend within a few years. Currently, such measures are in place in several counties, including Los Angeles, Ventura, and Marin, as well as a number of municipalities, including San Francisco, Pasadena, San Jose, Santa Cruz, Oakland, and, of course, Berkeley.

Unlike their state and federal counterparts, local wage ordinances tend to be more restrictive in scope; rather than setting citywide mínimums' applicable to all employers, public and private, most cities have chosen a piecemeal approach, targeting only recipients of city contracts or lessees or larger businesses with more employees and higher earnings. See Santa Monica, Calif, Adopts First ‘Living Wage’ Law, Wall St. J., July 26, 2001, at B4 (noting that, unlike most cities, Santa Monica adopted an ordinance targeting certain private employers regardless of city contracts); see also Martha Groves, Backers of Failed ‘Living Wage’ Vow to Press On, L.A. Times, Nov. 7, 2002, §. 2, at 10 (Santa Monica’s ordinance repealed in 2002 via voter initiative). These local ordinances also differ from their federal and state counterparts in that they mandate significantly higher wages and employee benefits from governed employers. See id. (noting that Santa Monica’s measure would have required businesses to pay employees $10.50 an hour with health benefits -or $12.25 without). Their proponents’ goals are to allow covered full-time wagé'-earn-ers to support a family residing in the locality at a subsistence level; it is for this reason that such ordinances are often referred to as “living wage ordinances,” rather than “minimum wage ordinances.” See ACORN Living Wage Resource Ctr., Setting a Living Wage Level.2,

In part, this rising tide of state and. local legislation has developed due to the decline in the real value of both federal and state minimum wages, which have not risen along with inflation or the cost of living. Compare United States Dep’t of Labor, Chart of Minimum Wage Values in Constant Dollars³ (noting that if the 1968 minimum wage of $1.60 per hour had kept up with inflation, it would be worth approximately $8.00 per hour in 1996 dollars), with 29 U.S.C. § 206(a)(1) (current federal minimum wage is $5.15 per hour). States, too, have recently refocused their efforts on the working poor, e.g., CaLCode Regs, tit. 8, § 11000(2) (raising California’s minimum wage to $6.25 per hour in 2001, and to $6.75 per hour, effective January. 1, 2002), but have not been able to bridge the gap between the realities of statewide legislation and the high cost of living in certain localities, see Heather Boushey et al., Hardships in America: The Real Story of Working Families 78 tbl. A4.1 (Ecdn. Policy Inst.2001) (estimating the annual subsistence cost of living in San Francisco as $38,431, or $18.47 per hour for full-time employees, and in Oakland as $31,848, or $15.31 per hour).⁴ It is against this backdrop that many localities in California and nationwide have enacted livihg wage ordinances. .,

B. The Berkeley Living Wage Ordinance

The City of Berkeley enacted its living wage ordinance on June 27, 2000. See Berkeley Ordinance No. 6548-N.S. (2000). The .ordinance mandated minimum hourly wages and employee benefits for certain employers that'received some form of financial benefit from' the City (e.g., City contract awardees, lessees of City property, City- financial aid recipients), and that ipeet specified criteria (i.e., number of employees, annual revenues). See id. § 2 (creating- Berkeley Municipal Code § 13.27.030).

Acconipanjdng the ordinance were the City Council’s findings explaining the reasoning behind the ordinance. The Council expressed its concern that “far too many people working in Berkeley ... live below or near the poverty line” and that, therefore, “the privilege of using public property to operate a business enterprise should not be granted to parties that will exacerbate the problems associated with inadequate compensation of workers.” See id. § 1(d), (g). It further found that the absence of employer-sponsored health insurance plans ultimately results in higher healthcare costs 'for the City, state, and federal governments. See id. § 1(1). Therefore, the City mandated that employers meeting the relevant criteria be required to pay their employees a minimum of $9.75 per hour, unless they do not provide their employees with health benefits, in which case they must pay them a minimum of $11.37 per hour. See id. § 2 (creating Berkeley Municipal Code § 13.27.050(A)).

The minimum wages exceeded then and now both the federal and state minimum wage requirements. At the time of the ordinance’s enactment, federal law required a minimum wage of $5.15 per hour, 29 U.S.C. § 206(a)(1), and California law required a minimum wage of $5.75 per hour. Since its enactment, California has raised its minimum wage to $6.25 per hour in 2001, and most recently to $6.75 per hour, effective January 1, 2002. CaLCode Regs. tit. 8, § 11000(2).

The Ordinance requires employers to provide their employees a minimum of 22 days off per year for vacation, sick leave, or personal necessity, of which at least 12 days were to be paid. See Living Wage Ordinance § 2 (creating Berkeley Municipal Code § 13.27.050(B)). It also requires that a provision mandating compliance with its terms be included in every new or amended City contract or lease.. See id. (creating Berkeley Municipal Code § 13.27.060). It includes a mechanism for receiving employee complaints and a private right of action for employees in county and state courts. See id. (creating Berkeley Municipal Code §§ 13.27.090-.100).

Before enacting the living wage ordinance, the City commissioned a feasibility and cost study. The study concluded that the cost of the ordinance op City lessees could be borne in three ways, by: (1) the City, in the form of lower lease revenue upon renegotiation of the leases; (2) the affected employers, in the form of reduced profits; and/or (3) consumers who purchase products or services from the affected businesses, in the form of higher prices. Although all three of these cost-bearing mechanisms would likely be implicated, it was impossible to conclude what the “split” among them would be. Id. The study’s authors apparently assumed that the living wage ordinance would be implemented for City lessees only upon the renegotiation of their lease contracts.

C. The Marina Amendment

In the latter part of the 19th century, the state Board of Tide Land Commissioners granted tidelands in San Francisco Bay to private parties free of public trust. See City of Berkeley v. Superior Court, 26 Cal.3d 515, 162 Cal.Rptr. 327, 606 P.2d 362, 363 (1980). Through careful and stringent land use regulation, the City of Berkeley attempted to ensure that this then-private land would retain its environmental and open space, character.

In 1913, the State of California granted 4,388 acres of tidelands to the City of Berkeley to be held in a public trust. See Act of June 11, 1913, ch. 347, 1913 Cal. Stat. 45, amended by Act of Apr. 24, 1962, ch. 55, 1962 Cal. Stat. 343. The grant provided that these lands be used only for purposes consistent with the trust, including promoting public access to and enjoyment of the waterfront as a natural resource and place of recreation. City of Berkeley, 162 Cal.Rptr. 327, 606 P.2d at 365.

After numerous attempts in court by the State of California and the City of Berkeley to declare that the private land was impressed with the public trust, the City eventually persuaded the State to acquire the land and combine it with the public trust lands to form Eastshore State Park. Thus, the Marina is held in the public trust by the City as trustee.⁵

In the 1960s, the City abandoned a proposal to turn the site into an industrial area and garbage dump, and decided instead to create a marina and recreation area. Over the past several decades, the City has invested tens of ■millions of dollars improving the marina area, building public facilities, and creating open spaces, as well as encouraging the public to enjoy these facilities by sponsoring programs and special events. The City also leased some of the land to private entities, such as RUI’s predecessor in interest, to operate businesses thereon. Since 1987, however, the City has imposed a moratorium on commercial development in the Marina.

On September 19, 2000, Berkeley’s city council amended the living wage ordinance to also cover certain employers in the Berkeley Marina. See Berkeley Ordinance No, 6583-N.S. (2000) (amending Berkeley Municipal Code ch. 13.27). The Marina Amendment defines the Marina as “all land held in trust by the City of Berkeley.” Id. The amendment added “[ejntities within the boundaries of the Marina Zone which employ six (6) or more employees and generate $350,000 or more in annual gross receipts,” to the list of employers required to comply with the minimum wage, leave, and health benefit provisions of the living wage ordinance. See id. § 2 (amending Berkeley Municipal Code § 13.27.030). The amendment requires such Marina employers to provide their employees with the higher wages and improved benefits effective immediately, rather than upon the signing of a new lease contract with the City incorporating its terms.⁶ The Marina Amendment also encompasses businesses that are not City lessees, including for example mobile food-service vendors or water-based services (e.g., charter boats), and which therefore would not have been covered under the original Living Wage Ordinance.

The amendment was accompanied by City Council findings that: (1) the public interest is served by requiring large Marina employers to pay their employees a living wage because operating a business in the public trust land of the Marina is a privilege, which should not be abused by contributing to the problems associated with inadequate compensation of workers; (2) the City expends considerable resources in maintaining and promoting the Marina, in turn affording Marina- businesses significant financial benefits, a reasonable portion of which should be used to provide employees with appropriate wages and benefits; and (3) members of the pub-lie who visit the Marina have a limited choice of businesses to patronize in that area, and should not be deterred from visiting the Marina because they do not wish to patronize businesses that do not provide their employees a living wage.⁷ Id. § 1.

D. The RUI Lease

On March 23, 1968, RUI’s predecessor in interest, Manning’s, Inc., entered into a fifty-year lease (expiring in 2018) with the City for land located on the public-trust tidelands in the Berkeley Marina. The lease agreement required the lessee to “construct, maintain and operate thereon a major first-class restaurant and cocktail lounge for the convenience and promotion of commerce, navigation and fishery in the Berkeley Marina and for no other purpose.” The annual rent due the City was the greater of $11,400 or 2.5% of the restaurant’s gross receipts (i.e., before the restaurant deducts operating expenses and labor costs). The lease also contained a number of specific provisions, including provisions requiring the lessee to charge its customers reasonable rates consistent with similar establishments in the San Francisco Bay area (the “reasonable rate requirement”) and to “employ its best judgment, efforts and abilities” to maximize profits and enhance the reputation of the Berkeley Marina.

The lease was assigned via an intermediary to the Kries-Grundy Corporation in 1969. In turn, the property was subleased by Berkeley Marina Associates, who in turn subleased it to Restaurants Unlimited, Inc. In August of 1996, Restaurants Unlimited, Inc., assigned the lease to its subsidiary, RUI One Corp. The assignment agreement increased the rent for the leased property to 3.0% of the restaurant’s gross receipts until June 30, 2007, and 3.3% of the gross receipts thereafter until the end of the lease term in 2018. The lessee also agreed to install a “grease trap” in the restaurant, which according to a letter from the Berkeley City Manager would cost approximately $50,000. At the time of the lease renegotiation, neither the Living Wage Ordinance nor the Marina Amendment had yet been enacted.

E. Procedural History

On October 19, 2000, RUI filed a complaint for declaratory and injunctive relief against the City in the Northern District of California, alleging that the Living Wage Ordinance and Marina Amendment violate the Contract Clause, Equal Protection Clause, and Due Process Clause. Over one year later, the district court permitted the Hotel Employees & Restaurant Employees Union, Local 2850, to intervene on behalf of the City. RUI subsequently moved for summary judgment, alleging inter alia that the Marina Amendment was unconstitutional. The district court sua sponte granted summary judgment to the City and Local 2850, holding that the ordinance was not unconstitutional. The parties stipulated to judgment, and this appeal followed.

II.

“No State shall ... pass any ... Law impairing the Obligation of Contracts.” United States Const, art. I, § 10, cl. 1. Although the text of the Contract Clause is “facially absolute,” the Supreme Court has long held that “its prohibition must be accommodated to the inherent police power of the State ‘to safeguard the vital interests of its people.’ ” Energy Reserves Group, Inc. v. Kan. Power & Light Co., 459 U.S. 400, 410, 103 S.Ct. 697, 74 L.Ed.2d 569 (1983) (quoting Home Bldg. & Loan Ass’n v. Blaisdell, 290 U.S. 398, 434, 54 S.Ct. 231, 78 L.Ed. 413 (1934)).

Whether a regulation violates the Contract Clause is governed by a three-step .inquiry: “The threshold inquiry is ‘whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.’ ” Id. at 411, 54 S.Ct. 231 (quoting Allied Structural Steel Co. v. Spannaus, 438 U.S. 234, 244, 98 S.Ct. 2716, 57 L.Ed.2d 727 (1978)). If this threshold inquiry is met, the court must inquire whether “the State, in justification, [has] a significant and legitimate public purpose behind the regulation, such as the remedying of a broad and general social or economic problem,” to guarantee that “the State is exercising its police power, rather than providing a benefit to special interests.” Id. at 411-12, 54 S.Ct. 231 (citation omitted). Finally, the court must inquire “whether the adjustment of ‘the rights and responsibilities of contracting parties is based upon reasonable conditions and is of a character appropriate to the public purpose justifying the legislation’s adoption.’ ” Id. at 412-13, 54 S.Ct. 231 (quoting United States Trust Co. v. New Jersey, 431 U.S. 1, 22, 97 S.Ct. 1505, 52 L.Ed.2d 92 (1977)). “Unless the State itself is a contracting party, ‘as is customary in reviewing economic and social regulation, ... courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.’ ” Id. at 412-13, 54 S.Ct. 231 (quoting United States Trust Co., 431 U.S. at 22-23, 97 S.Ct. 1505) (footnote omitted). Courts defer to a lesser degree when the State is a party to the contract because “the State’s self-interest is at stake.” United States Trust Co., 431 U.S. at 25-26, 97 S.Ct. 1505.

The threshold inquiry — whether the state law “has ‘operated as a substantial impairment of a contractual relationship’ ” — itself has three components: “whether there is a contractual relationship, whether a change in law impairs that contractual relationship, and whether the impairment is substantial.” Gen. Motors Corp. v. Romein, 503 U.S. 181, 186, 112 S.Ct. 1105, 117 L.Ed.2d 328 (1992) (quoting Allied Structural Steel Co., 438 U.S. at 244, 98 S.Ct. 2716). The first sub-inquiry is not whether any contractual relationship whatsoever exists between the parties, but whether there was a “contractual agreement regarding the specific ... terms allegedly at issue.” Id. at 187, 112 S.Ct. 1105. It is at this initial phase of the analysis that RUI’s claim, like General Motors’s claim in Romein, fails.

RUI contracted with Berkeley to lease land and operate a restaurant on it. As the dissent acknowledges, post, at 1160-61, no specific provision of the lease agreement addresses payment to or employment benefits for RUI’s employees. Similarly, in Romein, General Motors challenged the effect of a Michigan workers’ compensation statute on its .employee contracts. Id. at 187, 112 S.Ct. 1105. The employment contracts, however, “ma[d]e no express mention of workers’ compensation benefits,” and thus the Supreme Court concluded there was, no need to address whether there was a substantial impairment. Id. at 187-88, 112 S.Ct. 1105.

RUI makes four ultimately unpersuasive arguments in an effort to overcome the Supreme- Court’s controlling contractual relationship analysis in Romem.

A. No specific terms of the lease agreement are impaired by the Marina Amendment.

First, acknowledging that Romein controls our decision, RUI argues that the Marina Amendment in fact impairs three specific provisions of the lease agreement: (1) the setting of the annual rent in terms of the restaurant’s gross profits (excluding operating and labor costs); (2) the reasonable rate requirement; and (3) the requirement that RUI use its best judgment in managing the restaurant to maximize profits and enhance the reputation of the Berkeley Marina. This argument fails because none of these provisions specifically addresses the wages and benefits that RUI must pay its employees. Moreover, RUI glosses over the fact that the rent provision, calculating rent as a percentage of gross receipts, before labor costs are deducted, is not affected by increased wage and benefit costs. Nor does the Marina Amendment affect directly the rates RUI charges or¹ .RUI’s best judgment. The latter two remain entirely within RUI’s control.

B. No “implied” terms of the lease agreement are impaired by the Marina Amendment.

RUI next argues that the Marina Amendment impairs an implied term of the lease agreement. Because the lease agreement contains an integration clause, the lease represents the parties’ entire agreement, and there can be no implied terms. The dissent turns this tenet of contract law on its head by insisting that the absence of a specific term as to employee wages and benefits means the parties actually agreed to incorporate RUI’s existing pay scale as part of the lease agreement. RUI’s then existing pay scale plainly was not a part of the lease agreement and, more importantly, California law precludes this implication. See California Practice Guide: Civil Trials and Evidence § 8:3087 (2003) (“An integration clause is an express statement that all prior discussions are superseded by (or ‘merged’ into) the written agreement.”). Thus, any agreements between Berkeley and RUI that were not expressed in the written agreement were presumptively superseded by the written agreement. The dissent’s insistence that “silence in this integrated lease contract represents Berkeley’s agreement not to interfere in RUI’s wage setting,” post, at 1162, presumably by not passing laws governing wages and benefits, is illogical and without legal support.

While California law will imply non-essential terms, “those implied rights must be closely connected to the express provisions of the contract.” McMillin Scripps N. P’ship v. Royal Ins. Co. of Am., 19 Cal.App.4th 1215, 1220, 23 Cal.Rptr.2d 243 (Ct.App.1993). Most damaging to RUI’s claim is that the agreement in question is a commercial lease. Employee wages and benefits are not closely connected to the express provisions of the lease agreement and a city’s agreement not to adjust wages and benefits would clearly be an essential term that must be expressed.

As for the more specific circumstance of a Contract Clause claim, the Romein Court recognized that implied contractual terms can form the basis for a Contract Clause claim, but that “the contracting parties [must] ... manifest[ ] assent” to such a term, and that such a term must be “so central to the bargained-for exchange between the parties, or to the enforceability of the contract as a whole, that it must be deemed to be a term of the contract.” Id. at 188-89,112 S.Ct. 1105. RUI neither explains what the implied contract term is, nor shows how Berkeley manifested its assent to that term, nor demonstrates why any such term would be “central to the bargained-for exchange.”

‘ In contrast, we have found state statutes and municipal ordinances to impair implied contractual terms substantially when such terms were clearly part of the bargained-for agreement. In University of Hawaii Professional Assembly v. Cayetano, for example, Hawaii enacted a “pay lag” statute, authorizing the State unilaterally to postpone the dates on which state employees received their salaries. 183 F.3d 1096, 1099 (9th Cir.1999). Even though the employees’ collective bargaining contract with the state did not contain an explicit term requiring specific payroll dates, we found that twenty-five years of payments on the fifteenth and last days of each month amounted to a “course of dealing,” creating an enforceable contractual expectation under Hawaii contract law. Id. at 1102.

More recently, we found that the City of Santa Ana’s 2001 ordinance imposing a trench-cutting fee substantially interfered with a local utility’s right under a 1938 franchise, allowing it to lay pipes under city streets in exchange for a-percentage of the utility’s profits. See Southern California Gas v. City of Santa Ana, 336 F.3d 885, 890 (9th Cir.2003) (per curiam). ■ Although the 1938 contract did not specifically forbid the city from imposing such fees, we noted that a fair reading of its terms, coupled with years of past practice, conferred on the utility a right to excavate below city streets and repair any damage it creates in the process — and that the city’s bald attempt to increase its revenue by imposing an additional “direct, immediate and measurable[cost, which] affects a central provision of the franchise” was therefore unconstitutional. Id. at 892.

RUI has failed to identify any specific implied contractual right it enjoys as a result of its lease agreement with the City that is impaired, substantially or not, by the Marina Amendment. Moreover, to the extent that RUI contends that the lease agreement contains an implied term providing that the City would not enact any ordinances imposing an economic burden upon RUI during the period of the lease, such a contractual term would be void as against public policy. For “ ‘the legislature cannot bargain away the police power of a State.’ ... [T]he Contract Clause does not require a State to adhere to a contract that 'surrenders an essential attribute of its sovereignty.” United States Trust, 431 U.S. at 23, 97 S.Ct. 1505 (quoting Stone v. Mississippi, 101 U.S. 814, 817, 25 L.Ed. 1079 (1880)).

Otherwise, one would be able to obtain immunity from the state regulation by making private contractual arrangements .... [As] summarized in Mr. Justice Holmes’ well-known dictum: ‘One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them.’

See id. at 22, 97 S.Ct. 1505 (quoting Hudson County Water Co. v. McCarter, 209 U.S. 349, 357, 28 S.Ct. 529, 52 L.Ed. 828 (1908)); see also Avco Cmty. Developers, Inc. v. S. Coast Reg'l Comm’n, 17 Cal.3d 785, 800, 132 Cal.Rptr. 386, 553 P.2d 546 (1976) (“[I]t is settled that the government may not contract away its right to exercise the police power in the future.”).⁸

• The power to regulate wages and employment conditions lies clearly within a state’s or a municipality’s police power. “ ‘States possess broad authority under their police powers to regulate the employment relationship to protect workers within the State. Child labor laws, minimum and other wage laws, laws affecting occupational health and safety ... are only a few examples.’ ” Metro. Life Ins. Co. v. Massachusetts, 471 U.S. 724, 756, 105 S.Ct. 2380, 85 L.Ed.2d 728 (1985) (quoting DeCanas v. Bica, 424 U.S. 351, 356, 96 S.Ct. 933, 47 L.Ed.2d 43 (1976)).

Moreover, the lease agreement contains a provision mandating that RUI “comply with all applicable laws, ordinancefs] and regulations of the City [of Berkeley], County, State and United States Governments.” California courts have consistently interpreted such provisions to mean that a party to a contract will “comply with existing as well as future law.” Marina Plaza v. Cal. Coastal Zone Conservation Comm’n, 73 Cal.App.3d 311, 140 Cal.Rptr. 725, 732 (1977); accord Hermosa Beach Stop Oil Coalition v. City of Hermosa Beach, 86 Cal.App.4th 534, 103 Cal.Rptr.2d 447, 463 (2001). Thus, contrary to RUI’s suggestion, the lease agreement provides that RUI will be subject to regulation that may change with time, not that it is immune from such regulation.

Flying in the face of this express “compliance with law” lease term, the dissent makes the hyperbolic argument that there was no reason for RUI to specifically negotiate an exemption from future increases in the minimum wage because RUI could not have anticipated that the City would “effectively rewr[i]te RUI’s lease by ordinance..” Post, at 1163. In support, it asserts that “[t]he Contract Clause protects parties doing business with the government from such arbitrary exercises of sovereign authority,” and then offers a lengthy string cite of cases it represents exemplify “such arbitrary exercises of sovereign authority.” Post, at 1163. None of these cases supports the assertion that the Marina Amendment is such an “arbitrary exercise[] of sovereign authority.”⁹ In each cited case (except University of Hawaii, discussed in detail supra p. 1148-49), the newly enacted ordinance directly affected a specific, express term in the government contract.¹⁰

For example, in Air Cal, Inc. v. City & County of San Francisco, we held that a wage condition in a municipal ordinance impaired the private airlines’ leases with the City. 865 F.2d 1112, 1116 (9th Cir.1989). However, the written leases gave the airlines the right to “hire and train” employees. We reasoned that “the ordinary meaning of the term ‘to hire’ commonly includes both a ‘selection’ and ‘payment’ component.” Id. at 1115. Therefore, the leases expressly contemplated how the airlines would treat employee’s wages and benefits, and the ordinance clearly impaired that specific provision, as in Romein.

C. No “expected benefits” are impaired by the Marina Amendment.

Third, RUI argues that even if the Marina Amendment does not affect an express or implied term of the lease agreement, it impairs “the very value bargained for” in the agreement. The “value” to which RUI refers is its anticipated net profit from the lease and operation of the restaurant, which it contends the Marina ■Amendment will réduce. In support, RUI cites two Lochner-era Supreme Court cases. See Ga. Ry. & Power Co. v. Town of Decatur, 262 U.S. 432, 439, 43 S.Ct. 613, 67 L.Ed. 1065 (1923) (holding unconstitutional town’s subjection of newly annexed land to its train-ticket price controls); Boise Artesian Hot & Cold Water Co. v. Boise City, 230 U.S. 84, 92-93, 33 S.Ct. 997, 57 L.Ed. 1400 (1913) (holding unconstitutional city’s charging a “rental” fee to utilities laying pipes below city streets). The Court’s analysis in these cases, both decided during the heyday of economic due process, has been long, superseded by its approach to the Contract Clause developed over the past three decades, subjecting only state -statutes that impair a specific (explicit or implicit) contractual provision to constitutional scrutiny.¹¹ As amici point out, state and local- governments routinely impose obligations on resident businesses, compliance with which costs money, which in turn reduces the businesses’ profits to the extent of those costs. Compliance with nearly all environmental, workplace-safety, and public-health regulations requires private entities (and often government, lessees) to- divert resources that could otherwise be realized as profits by their owners. See Matea .Gold, Council Deadlocks on Renaming Crenshaw Blvd., L.A. Times, June 26, 2003,.. at B3 (local business owners opposed to renaming thoroughfare after Tom Bradley, Los An-geles’s first African-American mayor, due to increased “doing business”, costs associated with the address change, e.g., new stationary, cards, signage); -Adoption of RUI’s, rationale would subject all such measures to constitutional scrutiny, an approach the Supreme Court rejected more than half a century ago.

D. That one contracting party is the sovereign does not affect the threshold analysis of whether a specific term in the contract has been impaired.

RUI also argues that because the City is a party to the contract, we should afford less deference to its actions in general, and subject them to more stringent Contract Clause scrutiny. Courts, however, apply a decreased deference for self-interested government acts only upon reaching the third component of the Contract Clause analysis — the inquiry into the government’s legislative judgment that the ordinance is reasonable and of appropriate character. Energy Reserves, 459 U.S. at 413, 103 S.Ct. 697. We do not reach this inquiry because RUI cannot show that there was any contractual impairment in the first instance.

The dissent disregards the segmented inquiry that the Contract Clause requires, as explained supra, at 1147. It would have us examine the government’s status as a party in making the threshold inquiry of whether a new law substantially impairs the contract at issue. Our case precedent is clear and contrary to the dissent’s views: only once we find that a contract is substantially impaired may we turn to the further questions of legitimate public purpose and reasonableness. See Energy Reserves, 459 U.S. at 413, 103 S.Ct. 697. The government’s supposed self-interest is simply not relevant to the factual determinations prerequisite to a finding on this threshold issue — formation, terms and impairment.

Although the dissent cites Southern California Gas to support its theory, Southern California Gas actually stands for the proposition that a court conducts a self-interest analysis as part of the “reasonable and necessary” inquiry only after concluding that the contract is substantially impaired. 336 F.3d at 894. In Southern California Gas, we concluded that a “trench cut” ordinance affected a right-to-repair proviso — a “central!,]” “specifically contracted for provision” — of a prior agreement between the City and a gas company. Id. at 892-93. In contrast to the agreement, which allowed the company an opportunity to perform repair work after an excavation and to pay the City for further repairs only if the work was faulty, the ordinance imposed an estimated fee, in advance, regardless of the actual quality of repairs. Id. at 893. By saddling the company with “the cost of reimbursing Santa Ana for repairs and the complication of determining the value of such repairs,” we concluded that the ordinance “substantially impairs the separate right to repair damage to streets....” Id. at 894. Only then did we address the City’s self-interest in imposing the ordinance. Id. (“Because Santa Ana has substantially impaired its own contract, it has the burden of establishing that the trench cut ordinance is both reasonable and necessary to an important public purpose.”). See also University of Hawaii, 183 F.3d at 1106-07 (Court conducts self-interest analysis as part of “reasonable and necessary” inquiry, only after concluding that the contract was substantially impaired); Exxon Corp. v. Eagerton, 462 U.S. 176, 188-90, 103 S.Ct. 2296, 76 L.Ed.2d 497 (1983) (court first concludes that only one of two provisions at issue impacted contractual obligations, then proceeds to assess the general applicability of the implicated provision in its determination of whether the substantial impact was reasonable and necessary).

For the first time on appeal, RUI also contends that the Marina Amendment violates the implied covenant of good faith and fair dealing in the lease agreement. Because the issue was not raised before the district court, we do not decide it. In any event, this argument would not help RUI’s case. California courts have held “unavailing” a party’s contention that “the implied covenant of good faith and fair dealing requires the County to exempt [it] from the application of [a subsequently enacted county ordinance].” Interstate Marina Dev. Co., 202 Cal.Rptr. at 388.

The argument that Berkeley impaired RUI’s “expected benefit” under the lease is a transparent attempt to resurrect RUI’s waived good faith and fair dealing claim. See, e.g., Johnson v. Mutual Ben. Life Ins. Co., 847 F.2d 600, 603 (9th Cir.1988) (“The implied covenant of good faith and fair dealing requires that neither party to a contract will injure the right of the other to receive the benefits of the agreement.”) (quotation omitted). In any event, the good-faith doctrine should not be used to second-guess the actions of a contracting party. “The fact that a discretion-exercising party causes the dependent party to lose some or all of its anticipated benefit from the contract ... is insufficient to establish a breach of contract by failing to perform in good faith.” Steven J. Burton, Breach of Contract and the Common Law Duty to Perform in Good Faith, 94 Harv. L.Rev. 369, 385 (1980). Accordingly, “courts, mindful that good faith should not be used as a vehicle for judicial fiat, defer to a party who acts with no improper purpose.” Id. at 384.

The lease agreement provides that RUI will “comply with all applicable ordinance^] and regulations of the City.” Therefore, RUI was on notice that Berkeley could pass future ordinances that might adversely affect RUI’s expected benefits under the lease agreement. Furthermore, Berkeley cannot contract out of its police powers or its duties as trustee. See Caminiti v. Boyle, 107 Wash.2d 662, 732 P.2d 989, 994 (1987) (“The state can no more convey or give away this jus publi-cum interest than it can ‘abdicate its police powers in the administration of government and the preservation of the peace.’ ”). In the absence of proof of subterfuge — and the dissent does no more than speculate, post, at 1163 — -Berkeley’s actions do not evince an “improper purpose” that is inconsistent with the terms of the lease agreement. Because Berkeley acted under rights expressly reserved by it in the lease agreement and consistently with its duties as public trustee, RUI has no basis for its allegation of bad faith interference with expected profits.

The dissent would also have us abandon traditional cannons of contractual interpretation to reach the conclusion that silence as to employee wages in a commercial lease agreement somehow creates implied material terms, without telling us what those terms might be. Yet, as the Supreme Court has stated, “[w]e will not strain to reach a constitutional question” through mere speculation. Exxon, 462 U.S. at 188, 103 S.Ct. 2296 (citation omitted). Not only are commercial leases far removed from the collective bargaining agreements at issue in the cases advanced by the dissent, but there are simply no lease terms, material or otherwise, that are implicated by the Marina Amendment. Thus, “Appellant’s Contract Clause challenge ... fails for the simple reason that there is nothing to suggest that the [law] nullified any contractual obligations of which appellants were the beneficiaries.” Id.

We therefore conclude that RUI has failed to show that any provision of its lease agreement with the City was impaired, much less substantially impaired, by the Marina Amendment.

Although RUI’s Contract Clause claim fails for lack of impairment, we also note that RUI implicitly conceded this claim at oral argument. See Cmty. Hosp. v. Thompson, 323 F.3d 782, 789 n. 5 (9th Cir.2003) (dismissing as moot cross-appeal based on party’s concession). In response to our questions about the permissible scope of Berkeley’s legislative authority, RUI first agreed that local ordinances setting minimum wages and employment benefits greater than those required under applicable federal or state law are permissible. RUI then acknowledged that Berkeley permissibly could have enacted a citywide living wage ordinance requiring all City businesses, or all City lessees, to pay higher wages to their employees, effective on a date certain. The problem with the Marina Amendment was, according to RUI, that it unfairly targeted Marina businesses for immediate implementation of the higher wages, while other Berkeley businesses (with whom RUI competes for customers) were spared payment of the higher wages until their leases with the City expired (at which point they could expect to negotiate a lower rent from the City).

In making this point, RUI assumed that Berkeley’s exercise of its police powers to raise employee wages is constitutional, regardless of the existence of preexisting lease agreements or contracts with the affected employers. Thus, RUI’s real complaint, as characterized by counsel, is not that the Contract Clause deprives Berkeley of the power to have enacted the ordinances in question, but rather that the manner in which it chose to exercise that power was unfairly discriminatory toward the class of businesses affected by the Marina Amendment. Because it is only the former question which is a proper subject of Contract Clause analysis, RUI’s challenge appears potentially viable only under the Equal Protection Clause, to which we now turn.

III.

RUI argues that the Marina Amendment violates its rights under the Equal Protection Clause, United States Const, amend. XIV, § 1, and Article I, Section 7 of the California Constitution. It claims it was unfairly targeted when the City expanded coverage of the Living Wage Ordinance to only a handful of employers — between one and five — due to the geographical restrictions, as well as the limitations on the number of employees (more than six) and annual revenue (more than $350,000). The equal protection analysis under the California Constitution is “substantially similar” to analysis under the federal Equal Protection Clause. See L.A. County v. S. Cal. Tel. Co., 32 Cal.2d 378, 196 P.2d 773, 781 (1948). Therefore, we must determine whether there is “any reasonably conceivable state of facts that could provide a rational basis for the classification,” FCC v. Beach Communications, Inc., 508 U.S. 307, 313, 113 S.Ct. 2096, 124 L.Ed.2d 211 (1993), because this case involves “social and economic policy,” and neither targets a suspect class nor impinges upon a fundamental right. “Where there are ‘plausible reasons’ for [legislative] action, ‘our inquiry is at an end.’ ” Id. at 313-14, 113 S.Ct. 2096 (quoting United States R.R. Ret. Bd. v. Fritz, 449 U.S. 166, 179, 101 S.Ct. 453, 66 L.Ed.2d 368 (1980)).

In the “Findings” section of the Marina Amendment, the City provided the following reasons for expanding the coverage of the Living Wage Ordinance to the Berkeley Marina:

A. The privilege of using the Public Trust tidelands to operate a revenue-generating enterprise should not be extended to parties that will exacerbate the problems associated with inadequate compensation for workers.... The City also expends considerable sums on the maintenance of the Public Trust tidelands as an attractive and pleasant location for both the public and entities operating therein. Therefore, the public interest is best served by requiring that those parties who operate on Public Trust land pay their employees a living wage; and

B. Employers who operate on Public Trust land enjoy a unique location and amenities which afford significant financial benefits, a reasonable amount of which should be used to provide employees with a living wage and health care benefits; and

C. Members of the public who visit the Public Trust tidelands have a limited choice of businesses to patronize in that area. The public interest is best served by ensuring that the public is not deterred from visiting the Public Trust tidelands because they do not wish to patronize businesses who do not pay their employees a living wage or provide them with health care benefits.

Marina Amendment § 1.

RUI contends that these were not the real reasons motivating the City Council’s decision, but that the City Council was instead motivated by a desire to help in the unionization campaign at a Marina hotel, and that in any case these findings are not supported by any evidence. Furthermore, RUI contends that, to the extent they are legitimate, these rationales for a living wage ordinance existed at the time of the lease renegotiation, and it was therefore improper to act on them after-wards to the detriment of RUI.

These contentions are unpersuasive. According to the Supreme Court, “it is entirely irrelevant for constitutional purposes whether the conceived reason for the challenged distinction actually motivated the legislature.” Beach Communications, 508 U.S. at 315,113 S.Ct. 2096. The First Circuit has specifically rejected a claim that an environmental ordinance violated the Equal Protection Clause because its challengers alleged that its passage was motivated by a desire to restrict a business’s power in dealing with unions. See Int'l Paper Co. v. Town of Jay, 928 F.2d 480, 485 (1st Cir.1991). Furthermore, “a legislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data.” Beach Communications, 508 U.S. at 315, 113 S.Ct. 2096. A person “attacking the rationality of the legislative classification ha[s] the burden ‘to negative every conceivable basis which might support it.’ ” Id. (quoting Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 364, 93 S.Ct. 1001, 35 L.Ed.2d 351 (1973)); see also Fitzgerald v. Rowing Ass’n, 539 U.S. 103, 123 S.Ct. 2156, 2160, 156 L.Ed.2d 97 (2003) (“judicial review is ‘at an end’ once the court identifies a plausible basis on which the legislature may have relied” (quoting Fritz, 449 U.S. at 179, 101 S.Ct. 453)).

The crux of RUI’s argument is that it was unfair to target only it and a small number of other businesses in the Marina Amendment. As discussed above, RUI concedes the City’s authority to regulate wages, and indeed to enact the original Living Wage Ordinance, but challenges the legislative decision that imposed the ordinance’s terms on Marina businesses prior to lease negotiation but not upon other similar businesses elsewhere in the City. Such legislative decisions are “virtually un-reviewable, since the legislature must be allowed leeway to approach a perceived problem incrementally.” Beach Communications, 508 U.S. at 316, 113 S.Ct. 2096. “ ‘[RJeform may take one step at a time, addressing itself to the phase of the problem which seems most acute to the legislative mind. The legislature may select one phase of one field and apply a remedy there, neglecting the others.’ ” Id. (quoting Williamson v. Lee Optical of Okla., Inc., 348 U.S. 483, 489, 75 S.Ct. 461, 99 L.Ed. 563 (1955)) (finding a rational basis where the state made geographic distinctions to determine tax rates for slot machines).

To the extent that RUI is raising a “class of one” equal protection claim, it fails as well. “A successful equal protection claim may be brought by a ‘class of one,’ when the plaintiff alleges that it has been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment.” Seariver Mar. Fin. Holdings Inc. v. Mineta, 309 F.3d 662, 679 (9th Cir.2002) (citing Vill. of Willowbrook v. Olech, 528 U.S. 562, 564, 120 S.Ct. 1073, 145 L.Ed.2d 1060 (2000) (per curiam)). Even though “ ‘[classifications should be scrutinized more carefully the smaller and more vulnerable the class is,’ ” id. (quoting Esmail v. Macrane, 53 F.3d 176, 180 (7th Cir.1995)), a number of large businesses that occupy and profit from prime real estate can hardly be considered vulnerable. Thus, RUI’s claim does not merit any special treatment. It was certainly rational, for the reasons discussed above, for the City to treat larger Marina businesses differently from their competitors outside the Marina.

Finally, RUI observes that the City’s stated rationales for the Living Wage Ordinance and the Marina Amendment existed well before these ordinances were enacted, and before the City renegotiated the lease agreement with RUI. Therefore, RUI contends, it was impermissible for the City to act on the basis of those rationales after it had already signed the revised lease agreement. Of course, the City was aware in 1996 that some of its residents suffered due to an inadequate income, that the City expended a great deal of resources on the Marina area, and that members of the public might prefer not to patronize establishments that pay their employees low wages. However, the rational-basis inquiry is a very lenient one, and specifically “attach[es no] legal significance to the timing” of legislative or municipal action. Bannum, Inc. v. City of Fort Lauderdale, 157 F.3d 819, 822 n. 3 (11th Cir.1998). Thus, the fact that the City could have enacted the Living Wage Ordinance before the lease renegotiation, or that it could have enacted the Marina Amendment as part of the original Living Wage Ordinance, is without constitutional moment.

We therefore uphold the City’s judgment on the basis of the findings it provided. 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. Although RUI claims that any benefit it receives is offset by the rent it pays the City, it is certainly “plausible” for the City legislators to believe that rent alone does not adequately discharge Marina businesses’ responsibilities to the public and City. Furthermore, it is certainly “plausible” that certain members of the public might be deterred from patronizing the Berkeley Marina if they knew that the businesses there paid their employees less than a living wage.

IV.

RUI’s final claim is that the City of Berkeley deprived it of due process under the United States and California Constitutions. U.S. Const, amend. XIV, § 1; Cal. Const, art. I, § 7. It claims that by including in the Living Wage Ordinance and the Marina Amendment a provision allowing bona fide collective bargaining agreements to opt out of the ordinance, the City effectively unconstitutionally delegated its legislative power to the unions negotiating these contracts. This argument fails as well.

The defect in RUI’s argument is that a provision allowing employees bargaining collectively to opt out of the provisions of a labor regulation is not a delegation of legislative power at all. See New Motor Vehicle Bd. v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 58 L.Ed.2d 361 (1978) (“An otherwise valid regulation is not rendered invalid simply because those whom the regulation is designed to safeguard may elect to forgo its protection.”). Legislative power is “the power to make laws and to alter them at discretion.” Black’s Laiv Dictionary 911 (7th ed.1999). Berkeley’s city council used its legislative power to enact an ordinance that covered certain businesses and not others — based on geographic location, number of employees, and the presence or absence of a collective bargaining agreement expressly waiving its applicability. Labor unions negotiating collective bargaining agreements with employers are not legislating, but rather negotiating on behalf of their members; if they reach an agreement with the employer for certain employee benefits and employment conditions that they consider superior to, but incompatible with, the Living Wage Ordinance, the parties can decide to waive its applicability. For example, employees at the Radisson Hotel in the Marina bargained for a pension plan in exchange for hourly wages below the ordinance’s rates.

As the Supreme Court has observed in a case determining whether a state labor policy was preempted by federal law, “a number of state and federal laws ... draw distinctions between union and nonunion represented employees,” Livadas v. Bradshaw, 512 U.S. 107, 131, 114 S.Ct. 2068, 129 L.Ed.2d 93 (1994) (citing 29 U.S.C. § 203(o); D.C.Code Ann. § 36-103 (1993)), in which the content of collective bargaining agreements can affect whether and how a statute applies. The Court referred to these as “familiar and narrowly drawn opt-out provisions.” Id. at 132, 114 S.Ct. 2068; see also Cal. Lab.Code § 554 (mandating one rest day per seven-day period “unless the collective bargaining agreement expressly provides otherwise”).

To support its position, RUI cites yet another Lochnerera case, this time one that found an impermissible delegation of legislative power where maximum hours and minimum wages in the mining industry could be set by majority or two-thirds vote of the producers and miners themselves. See Carter v. Carter Coal Co., 298 U.S. 238, 310-11, 56 S.Ct. 855, 80 L.Ed. 1160 (1936). In that case, the authority to set the hours and wages fell entirely on private parties. Only three years later, however, the Supreme Court found acceptable a statute that required tobacco growers to opt in to its terms by a two-thirds vote. See Currin v. Wallace, 306 U.S. 1, 15-16, 59 S.Ct. 379, 83 L.Ed. 441 (1939). The Currin Court distinguished Carter and explained:

This is not a case where a group of producers may make the law and force it upon a minority.... Here it is Congress that exercises its legislative authority in making the regulation and in prescribing the conditions of its application. The required favorable vote upon the referendum is one of these conditions.

Id. A provision of a statute allowing bona fide collective bargaining agreements to opt out of a statute is similarly not a legislative delegation, but rather simply a “condition of [the ordinance’s] application.” In the absence of any legislative delegation, RUI’s due process argument fails as well.

V.

The decision of the district court rejecting each of RUI’s constitutional challenges to the Marina Amendment to the City of Berkeley’s Living Wage Ordinance is

AFFIRMED.

1 . Available at http://www.dol.gov/esa/min-wage/america.htm.

2 . Available at http://www.livingwage campaign.org/wagelevel.php.

3 . Available at http://www.dol.gov/dol/ esa/pubhc/mmwage/main.htm.

4 .Available at http://www.epinet. org/books/hardships.pdf.

5 . The doctrine that the public holds the right to tidelands for purposes such as fishing, commerce and navigation originated in Roman law. City of Berkeley v. Super. Ct. of Alameda County, 26 Cal.3d 515, 521, 162 Cal. Rptr. 327, 606 P.2d 362 (1980). English common law also developed similar limitations to the rights of private persons over tidelands. Id. "After the American Revolution, the people of each state acquired ‘absolute right to all ... navigable waters, and the soils under them, for their own common use....'” Id. (quoting Martin v. Waddell, 41 U.S. (16 Pet.) 367, 410, 10 L.Ed. 997 (1842). See Shively v. Bowlby, 152 U.S. 1, 57, 14 S.Ct. 548, 38 L.Ed. 331 (1894)) (“At common law, the title and the dominion in lands flowed by the tide were in the King for the benefit of the nation.... Upon the American Revolution, these rights, charged with a like trust, were vested in the original states within their respective borders, subject to the rights surrendered by the constitution to the United States.”).

6 . The dissent argues that the Marina Amendment "shifts the burden of public assistance programs from the City to RUI and its customers.” Post, at 1171-72. Nothing in the record supports this supposition. Berkeley does not benefit directly from the ordinance— it is not a "tax” that increases city revenue— so it is inaccurate to characterize Berkeley as - a market-participant when it passes an ordinance that dictates employee wages. It is more accurate to characterize the ordinance as an exercise of Berkeley’s police power, and most accurate to characterize it as an action by a trustee.

7 . Although the dissent cites additional facts that it states "reveal why the Marina Amendment is an improper exercise of municipal authority,” post, at 1158, these facts are introduced solely to establish a supposed nefarious motive on behalf of the City Council. Such facts are wholly irrelevant, however, as our analysis of the constitutionality of an ordinance must proceed from the text of the ordinance, not the alleged motives behind it. See Golden State Transit Corp. v. City of Los Angeles, 686 F.2d 758, 761 (9th Cir.1982) ("It is well settled that a reviewing court 'will not strike down an otherwise constitutional statute on the basis of an allegedly illicit legislative motive.' ” (quoting United States v. O’Brien, 391 U.S. 367, 383, 88 S.Ct. 1673, 20 L.Ed.2d 672 (1968))).

8 . The same principle holds true with, regard to lands, like the land at issue here, held in the public trust. See Caminiti v. Boyle, 107 Wash.2d 662, 732 P.2d 989, 994 (1987) ("The state can no more convey or give away [the public trust] interest than it can 'abdicate its police .powers in the administration of government and the preservation of the peace.' ") (quoting Illinois Cent. R. Co. v. Illinois, 146 U.S. 387, 453, 13 S.Ct. 110, 36 L.Ed. 1018 (1892)).

9 . It is safe to say that neither the majority nor dissent supports “arbitrary exercises of sovereign authority,” but surely it is not simply the Contract Clause which protects government contractors from arbitrary acts.

10 . In its lengthy string cite of parentheticals, the dissent fails to reference the specific terms of the contracts that the courts found were impaired. See Southern California Gas, 336 F.3d at 892 (specific terms providing Gas Company "right to excavate” and right to "repair streets after excavations.”); State of Nevada Employees Ass’n v. Keating, 903 F.2d 1223, 1225 (9th Cir.1990) (specific term providing employees the right to "withdraw their [pension] contribution at any time without penalty.”); Continental Illinois National Bank & Trust Co. v. Washington, 696 F.2d 692, 695 (9th Cir.1983), appeal dismissed sub nom., The Don’t Bankrupt Washington Committee v. Continental Illinois National Bank & Trust Co., 460 U.S. 1077, 103 S.Ct. 1762, 76 L.Ed.2d 338 (1983) (specific terms providing inter alia that "[State] was 'duly authorized under all applicable laws to create and issue ... bonds,’ ” ... where such bonds "were revenue bonds to be paid solely from 'income, revenues, receipts and profits derived by ... ownership and operation ... of the project.’ ”); Sonoma County Organization of Public Employees v. County of Sonoma, 23 Cal.3d 296, 152 Cal.Rptr. 903, 905, 591 P.2d 1 (1979) (specific term providing "employees represented by the petitioner labor organizations a wage increase....”); Interstate Marina Dev. Co. v. County of L.A., 155 Cal.App.3d 435, 202 Cal.Rptr. 377, 382 n. 5 (1984) (specific term providing lessees the right to "sublease portions of the demised premises for a period not to exceed one year....”); Associated Builders & Contractors v. Baca, 769 F.Supp. 1537, 1549 (N.D.Cal.1991), aff'd on other grounds sub nom. Chamber of Commerce of the United States v. Bragdon, 64 F.3d 497, 502 (9th Cir.1995) (specific term providing wage benefits under collective bargaining agreements); Ross v. City of Berkeley, 655 F.Supp. 820, 828 (N.D.Cal.1987) (specific ■ term providing for a “fixed five-year lease.’’).

11 . The facts in Boise Artesian are strikingly similar to those of our recent Southern California Gas case, where we invalidated a similarly blatant ordinance, essentially double-charging a utility for a right for which it already paid. Cf. Boise Artesian, 230 U.S. at -92-93, 33 S.Ct. 997, with Southern California Gas, 336 F.3d at 887-88. This does not revive the LochnerTera Contract Clause analysis, but instead simply demonstrates how distinct jurisprudential principles can produce the same result in similar cases.

1 . Because I would find that Berkeley has violated the Contract Clause, I do not reach RUI’s equal protection and non-delegation claims. a living wage ordinance on private employers, whether they had a public contract or not, and the voters repealed the ordinance by referendum.