836 F.3d 412
3d Cir.2016Background
- Jersey City offers tax exemptions/abatements for private redevelopment projects and conditions those benefits on developers’ entry into project labor agreements (PLAs) with unions for "Tax Abated Projects" meeting a $25M threshold.
- The Ordinance requires PLAs (pre-hire collective-bargaining agreements), dispute-resolution provisions, apprenticeship quotas, and authorizes suspension/termination of tax benefits and liquidated damages for noncompliance.
- Appellants (ABC-NJ, several contractors, and an employee) sued to enjoin enforcement, alleging preemption by the NLRA and ERISA and violations of the dormant Commerce Clause, among other constitutional claims.
- The District Court dismissed, concluding Jersey City acted as a market participant (so federal preemption/dormant Commerce Clause constraints did not apply); plaintiffs appealed only the NLRA, ERISA, and Commerce Clause rulings.
- The Third Circuit reviewed de novo and framed the threshold question as whether Jersey City acted as a market participant or as a regulator when conditioning tax exemptions on PLAs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Jersey City acted as a market participant (vs. regulator) when imposing PLA conditions on tax-abated projects | The Ordinance is regulatory and thus subject to federal preemption and dormant Commerce Clause limits; plaintiffs argued City lacked proprietary market interest. | City (and intervenor union) argued tax abatements are subsidies that make the City a market participant, so federal constraints don’t apply. | Court: City is not a market participant for Tax Abated Projects; tax exemptions are not direct market participation (citing Camps Newfound). |
| NLRA preemption (whether Ordinance is preempted by §§ 7–8 of NLRA) | PLA requirement interferes with rights protected by NLRA (collective bargaining, strike/lockout self-help) and is preempted if regulatory. | If City is a market participant, NLRA constraints don’t apply. | Court did not decide on NLRA preemption merits; remanded because City was not a market participant, so preemption claim survives. |
| ERISA preemption (whether apprenticeship/benefit conditions are preempted) | Apprenticeship/benefit-related conditions may "relate to" employee benefit plans and be preempted by ERISA. | ERISA preemption inapplicable if City acts as market participant. | Court did not decide ERISA merits; remanded because market-participant finding was erroneous. |
| Dormant Commerce Clause (whether apprenticeship residency requirement discriminates against out-of-state workers) | Residency-apprenticeship quota favors in-state workers and burdens interstate commerce. | If City is a market participant, dormant Commerce Clause constraints do not apply. | Court did not resolve merits; remanded because City is not a market participant, so Commerce Clause claim remains viable. |
Key Cases Cited
- Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564 (1997) (tax exemptions are not equivalent to direct market participation for market-participant doctrine)
- Boston Harbor, Bldg. & Constr. Trades Council v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218 (1993) (market-participant doctrine and limits on NLRA application)
- White v. Massachusetts Council of Construction Employers, Inc., 460 U.S. 204 (1983) (Commerce Clause market-participant principles)
- Chamber of Commerce v. Brown, 554 U.S. 60 (2008) (government acting as market participant vs regulator)
- United Building & Construction Trades Council of Camden County v. City of Camden, 465 U.S. 208 (1984) (government funding and market participation in public projects)
- Lodge 76, Int’l Ass’n of Machinists v. Wisconsin Employment Relations Commission, 427 U.S. 132 (1976) (NLRA preemption of state laws that remove economic self-help)
- Department of Revenue v. Davis, 553 U.S. 328 (2008) (distinguishing market participation when state issues bonds it also sells)
- Garmon v. San Diego, 359 U.S. 236 (1959) (NLRA preemption principles)
- Hotel Employees & Restaurant Employees Union Local 57 v. Sage Hospital Resources, LLC, 390 F.3d 206 (3d Cir. 2004) (two-step Third Circuit test for market-participant status)