Merit Construction Alliance et al v. City of Quincy

Filing 10

Judge Rya W. Zobel: Memorandum of Decision entered granting 3 Motion for TRO. The parties shall jointly submit a proposed order within 14 days. (Urso, Lisa)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

CIVIL ACTION NO. 12-10458-RWZ

MERIT CONSTRUCTION ALLIANCE, et al.
v.
CITY OF QUINCY

MEMORANDUM OF DECISION
April 18, 2012
ZOBEL, D.J.
I. Background
Plaintiffs Merit Construction Alliance, a trade association, together with
Grasseschi Plumbing and Heating Inc., D’Agostino Associates, Inc., two of its members
and David Ross, a construction worker, complain that certain provisions of the
“Responsible Employer Ordinance” (“REO”) promulgated by the City of Quincy
(“Quincy”), § 15.26.010 of the Revised Ordinances of Quincy, violate the United States
Constitution and that others are preempted by the Employee Retirement Income
Security Act, 29 U.S.C.§ 1001, et seq. (“ERISA”). The members of the Alliance are
frequent bidders on public works projects throughout the Commonwealth of
Massachusetts including the City of Quincy. They seek an order declaring the
offending provisions unlawful and enjoining Quincy from enforcing them. The matter is
before me now on their motion for a preliminary injunction.

The REO was promulgated on May 17, 2010, by unanimous vote of the City
Council. It mandates, in the provisions in issue, that all contractors on public agency
projects (1) utilize a workforce 33% of which are residents of Quincy (REO at ¶ (D)); (2)
maintain and participate in an apprenticeship program (id. at ¶ (C)); and (3) provide
health and welfare (id. at ¶ (E)) and pension (id. at ¶ (H)) benefits for their employees.
Docket # 1 Ex. A at 7-8. The immediate impetus for the lawsuit was Quincy’s “New
Central Middle School Project.” On March 7, 2012, a few days before the
commencement of this action, Quincy issued an addendum to the Invitation to Bid on
that Project announcing that “in light of recent case law ... the city intends to suspend
application of ... the last sentence of Paragraph C ... Paragraph E in its entirety and
Paragraph H in its entirety.” Docket # 1 Ex. A at 7-8. Plaintiffs point out that although
Quincy has voluntarily suspended application of portions of the REO on the Middle
School Project, that suspension, by its terms, does not carry over to other construction
projects. Therefore, defendant may not only enforce all parts of the REO in other
contexts, but it may decide to revoke the suspension at any time without warning on
this Project. Plaintiffs therefore press the motion for injunctive relief.
Plaintiffs challenge the residency requirement as violative of the Privileges and
Immunities and Equal Protection Clauses of the United States Constitution, and the
health and welfare, pension and apprenticeship provisions as preempted by ERISA and
in conflict with Massachusetts Constitution, public bidding and prevailing wage laws.
II. Standard

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In ruling on a motion for a preliminary injunction, the district court must consider
“(1) the plaintiff's likelihood of success on the merits; (2) the potential for irreparable
harm in the absence of an injunction; (3) whether issuing an injunction will burden the
defendants less than denying an injunction would burden the plaintiffs; and (4) the
effect, if any, on the public interest.” Boston Duck Tours, LP v. Super Duck Tours, LLC,
531 F.3d 1, 11 (1st Cir.2008) (quotation marks and citations omitted).
III. Analysis
On October 4, 2011, this court enjoined an REO of the City of Fall River with
very similar residency, apprenticeship, health and welfare, and pension provisions.
Utility Contractors Association of New England, Inc., et al. v. City of Fall River, No 1010994-RWZ, 2011 WL 4710875, *9 (D. Mass. Oct. 4, 2011). Quincy seeks to avoid the
holding of Fall River on four principal grounds. First, it argues that it has a “substantial
reason” justifying its discrimination against non-residents, an argument that was not
presented by the City in Fall River. Second, because the REO contains a “genuine and
best effort[s]” hardship provision and only applies to city funded projects, it is “a lawful
exercise of [Quincy’s] police power, narrowly tailored to address its activity in the public
works marketplace.” Docket # 5 at 9. Third, it urges the court to revisit its Fall River
ruling and hold that an REO specifically mandating an apprenticeship program does
not “relate to” an apprenticeship program1 under ERISA, and fourth, even if a
mandatory apprenticeship program is an employee benefit program subject to ERISA

1

“Apprenticeship programs” are specifically defined as employee benefit plans under ERISA. 29
U.S.C. § 1002(1).

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preemption, here preemption is not appropriate because Quincy is acting as a “market
participant.”
The third and fourth arguments were squarely addressed in Fall River. Because
Quincy’s REO apprenticeship provision is not materially different from Fall River’s,
these arguments need not be revisited, and I decline defendant’s invitation to do so. Id.
at *4-5, *7. Further, Quincy acknowledges the similarity of its health and welfare and
pension provisions to those in the Fall River ordinance and does not seriously argue for
their survival. Therefore, only the residency requirement is truly at issue.
REO § 15.26.010 (D) provides:
In a manner that is consistent with applicable law, regulations, and
Chapter 12.28 of the Quincy Municipal Code, any bidder and all
subcontractors under the bidder shall employ qualified workers who are
residents of the City of Quincy, in a proportion of thirty-three (33%) for
each apprenticeable trade or occupation represented in their workforce
that is approved by the Division of Apprentice Training of the Department
of Labor and Industries. If a thirty-three percent (33%) qualified Quincy
workforce cannot be achieved, it is incumbent upon the bidder and all
subcontractors to prove in a manner approved by the Purchasing Agent,
that the bidder and all subcontractors made a genuine and best effort to
achieve said resident workforce representation.
To establish a violation of the Privileges and Immunities Clause, plaintiffs must
show that the discriminatory act impairs one of the protected privileges. Then, the
burden shifts to the governmental entity to establish that it had a substantial reason for
the difference in treatment and that the discrimination bears a substantial relationship
to those objectives. Toomer v. Witsell, 334 U.S. 385, 396 (1948); Supreme Court of
Virginia v. Friedman, 487 U.S. 59, 64–65 (1988).

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Quincy’s “substantial reason” for discriminating against non-residents is its
desire to ensure that "its taxpayers who are embarking over the next decade on a
multi-million dollar investment in their community [ ] see some return on their
substantial, and unique investment in the way of jobs" because it committed "$1.6
Billion dollars in public works contracts in its downtown" and other public works
projects. Docket # 5 at 7-8.
Quincy notes that prior to revising the REO the mayor of Quincy, Thomas P.
Koch, was “hearing from the citizenry on an almost daily basis that the blue collar
sector of the city needs work,” and that it is “axiomatic that every municipality would
wish to see its citizens employed, and would do whatever it could to insure that to
happen.” Id. The Mayor’s statements and defendant’s assertions certainly explain
Quincy’s desire that a certain percentage of jobs on its public works projects go to its
own residents. However, “the effect of the Privileges and Immunities Clause cannot be
avoided ‘solely under the guise of avoiding economic losses to residents.’” Silver v.
Garcia, 592 F. Supp. 495, 499 (D.P.R. 1984) aff'd, 760 F.2d 33 (1st Cir. 1985) (citing
Hicklin v. Orbeck, 437 U.S. 518, 518 (1978)). See also Util. Contractors Ass'n of New
England, Inc. v. City of Worcester, 236 F. Supp. 2d 113, 120 (D. Mass. 2002).
Quincy provides no evidence that the city engaged in any extensive fact finding,
conducted or commissioned any studies, or made any determination based on
evidence that non-residents were a particular source of the unemployment of Quincy’s
blue-collar workers. To the contrary, one may reasonably infer that non-residents
shop, ride public transportation, frequent restaurants and taverns, and in many other
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ways contribute substantially to the Quincy economy, and that Quincy residents are
gainfully employed well outside the confines of Quincy. The purpose of the Privileges
and Immunities Clause is “to insure to a citizen of State A who ventures into State B the
same privileges which the citizens of State B enjoy,” Toomer, 334 U.S. at 395.2
Defendant’s reliance on White v. Mass Council of Construction Employers, 460
U.S. 204 (1983), is misplaced. In White the Supreme Court upheld a mandatory 50%
residency requirement for city-funded construction projects where the city “was not
regulating the marketplace, but was spending city funds.” Docket # 5 at 9. However,
White was a challenge under the commerce clause, not, as here, the Privileges and
Immunities Clause. White explicitly did not address potential invalidation of the
ordinance under the latter because that issue had not been “briefed or argued.” Id. at
1048, n. 12. In any event, there is no “market participant” exception to the Privileges
and Immunities Clause.
Finally, defendant argues that the “best efforts” provision which allows for the
possibility of relief if the contractor does not reach the 33% threshold saves the entire
provision. However, the mere fact that Quincy chose to include a clause that could
potentially save a bidder from being subject to an unconstitutional residency mandate
does not render that mandate constitutional, as the applicability of the Privilege and
Immunities Clause does not depend on the level of hardship imposed on municipal
residents.

2

Municipal residents are entitled to the same protection. United Bldg. & Const. Trades Council of
Camden County & Vicinity v. Mayor & Council of City of Camden, 465 U.S. 208, 215 (1984).

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Therefore, Quincy does not provide a constitutionally adequate justification for
treating residents and non-residents differently in connection with the construction of its
public works projects.
IV. Conclusion
Fall River is directly applicable to the Quincy REO, and plaintiffs are therefore
likely to succeed on the merits. Plaintiffs’ and the public’s interest will be irreparably
harmed by the enforcement of Paragraphs C-E and H of the REO. Unquestionably, the
public interest is served by enjoining application of the cited provisions of the REO.
The Motion for a Preliminary Injunction (Docket # 3) is ALLOWED. The parties
shall jointly submit a proposed order within 14 days.

/s/Rya W. Zobel
RYA W. ZOBEL
UNITED STATES DISTRICT JUDGE

April 18, 2012
DATE

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