Allied Construction Industries v. City of Cincinnati
879 F.3d 215
6th Cir.2018Background
- Cincinnati enacted ordinances (2012, amended 2013) setting bidder-selection criteria for certain public works (sewers, water, stormwater), including preferring contractors that provide regular health-care and retirement contributions, require participation in apprenticeship programs, and pay into a pre-apprenticeship fund.
- §320-3(j)–(k) required bidders to certify contributions to employee health and pension plans as part of regular compensation.
- §320-5 required bidder participation in an apprenticeship program that graduated at least one apprentice for each of the prior five years; §320-7 required $.10/hour per worker to a city-managed pre-apprenticeship fund.
- Allied Construction (on behalf of nonunion members) sued, seeking to enjoin enforcement, arguing the provisions are preempted by ERISA because they relate to employee benefit plans.
- The district court granted summary judgment to Allied, holding the City acted as a regulator and the Ordinance was ERISA-preempted. The City and Union appealed.
- The Sixth Circuit reversed, holding the market-participant doctrine applies to ERISA and that, under the Cardinal Towing framework, the Ordinance reflected the City’s proprietary interest in efficient procurement.
Issues
| Issue | Allied Construction (Plaintiff) Argument | City/Union (Defendant) Argument | Held |
|---|---|---|---|
| Whether the Ordinance’s benefit- and apprenticeship-related bidder requirements are preempted by ERISA | Ordinance "relates to" employee benefit plans and thus is preempted | City argues it was acting as a market participant (proprietor) and so ERISA preemption does not apply | Not preempted: City acted as a market participant; ERISA does not bar the Ordinance |
| Whether the market-participant doctrine applies to ERISA preemption | Doctrine should not apply to ERISA (plaintiff contends state action is regulatory) | Doctrine applies; Boston Harbor rationale extends to ERISA | Market-participant doctrine applies to ERISA preemption analysis |
| Whether the Ordinance is proprietary under Cardinal Towing step one (efficient procurement test) | Ordinance effectively rigs bidding for unions and regulates non-city projects | Ordinance reflects legitimate procurement concerns (quality, stability, workforce training) similar to private owners | Satisfies step one: the requirements mirror private procurement practices and serve City’s proprietary interests |
| If step one failed, whether the Ordinance is narrowly tailored under Cardinal Towing step two (scope) | Ordinance reaches beyond city-only work by considering regular compensation on non-city jobs | Ordinance applies only to contractors who choose to bid on City projects and thus is sufficiently limited | Court did not need to reach step two because step one was satisfied; offered guidance that scope likely defensible |
Key Cases Cited
- Bldg. & Constr. Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218 (state acting as proprietor in bidding context protects against NLRA preemption)
- Cardinal Towing & Auto Repair, Inc. v. City of Bedford, 180 F.3d 686 (5th Cir. 1999) (two-step market-participant framework)
- Johnson v. Rancho Santiago Cmty. Coll. Dist., 623 F.3d 1011 (9th Cir. 2010) (applies Cardinal Towing to ERISA context)
- Petrey v. City of Toledo, 246 F.3d 548 (6th Cir. 2001) (discusses market-participant doctrine in FAAAA context)
- Engine Mfrs. Ass’n v. S. Coast Air Quality Mgmt. Dist., 498 F.3d 1031 (9th Cir. 2007) (private purchasers may consider factors beyond price in procurement)