TRI-M GROUP, LLC v. Thomas B. SHARP, Secretary, Delaware Department of Labor, Appellant.
No. 10-2365.
United States Court of Appeals, Third Circuit.
Argued Dec. 15, 2010. Opinion Filed: March 21, 2011.
638 F.3d 406
Here, even assuming Cacchillo has established that she will suffer irreparable harm, she has not met her burden to show that she has a likelihood of success on the merits. Cacchillo‘s claims hinge on Insmed‘s alleged promise to support Cacchillo‘s compassionate use application. Yet, Cacchillo has no evidence that such an agreement existed beyond her own vague recollection. Cacchillo has not described in any detail what exactly Insmed allegedly promised her; Cacchillo asserts only that (1) on its webpage, “Insmed stated that it supported clinical trial subjects’ compassionate use applications;” and (2) a clinical research coordinator not employed by Insmed “told [Cacchillo] that Insmed would support [Cacchillo‘s] application.”
Cacchillo‘s description of the alleged agreement is problematic for at least three reasons. First, Cacchillo‘s recollection of the contents of Insmed‘s website is belied by Insmed‘s exhibits showing that its website contained no such statements. Second, Cacchillo offers no theory of agency by which the clinical research coordinator‘s alleged statement would be binding upon Insmed. See Restatement (Second) of Agency § 27 cmt. b (explaining that only a principal‘s acts—and not those of an agent—may create apparent authority). Third, Cacchillo‘s vague descriptions of the alleged agreement, without more, strongly suggest that Cacchillo is not likely to establish that Insmed agreed to support her compassionate use application even if, as happened in the present case, Insmed concluded that the drug at stake is ineffective and better allocated to other patients.
Based on the foregoing, Cacchillo has not met her burden to establish that she is entitled to a mandatory preliminary injunction.
Conclusion
For the foregoing reasons, the order of the district court is hereby AFFIRMED.
Linda M. Carmichael, Esq., Jennifer D. Oliva, Esq. [Argued], Department of Justice, Wilmington, DE, for Appellant.
Alexander G. Bomstein, Esq., Stephen J. Sundheim, Esq. [Argued], Justin J. Williams, Esq., Pepper Hamilton, Philadelphia, PA, M. Duncan Grant, Esq., Pepper Hamilton, Wilmington, DE, for Appellee.
Before: RENDELL, HARDIMAN and VANASKIE, Circuit Judges.
RENDELL, Circuit Judge.
In this appeal, we confront Tri-M Group, LLC‘s (“Tri-M“) challenge to the constitutionality of Delaware‘s regulatory scheme for the training and compensation of apprentices on construction projects. In the District Court, Tri-M sought a declaratory judgment and injunctive relief against enforcement of the Delaware Prevailing Wage Regulations (“DPWR“),
Background & Procedural History
The facts of the underlying suit are undisputed. In response to passage of the National Apprentice Act (“Fitzgerald Act“),
Pursuant to the regulations, only a contractor that has registered its apprenticeship program in Delaware is eligible to pay the lower apprentice wage rate to registered apprentices. To qualify, a contractor
must be a “Delaware Resident Contractor” or hold and maintain a “Delaware Resident Business License.” The Registrant or Sponsor must hold and maintain a permanent place of business, not to include site trailers or other facilities serving only one contract or related set of contracts. To be eligible to be a Registrant or Sponsor, Employer/Business ... must have the training program and an adequate number of Journeypersons to meet the ratio requirements as stated for that particular apprenticeable occupation.
19-1000-1101 DEL. ADMIN. CODE § 3.1 .6
Under this rubric, an out-of-state contractor cannot sponsor an apprentice program without setting up and maintaining a permanent office location within Delaware.7 Failure to abide by these conditions may result in financial penalties and bar an employer judicially determined to have violated the PWL from bidding on public construction contracts for three years. See
Appellee Tri-M is a Pennsylvania-based electrical contracting company that successfully bid on a sub-contract for electrical and building automation work at the Delaware State Veterans Home (“the Project“) in Milford, Delaware, which was funded in part by Delaware state funds.9 Tri-M began work on the
On March 26, 2009, a DDOL Labor Law Enforcement Officer conducted an on-site inspection of the Project site. The officer subsequently informed Tri-M that the DDOL had opened a case to verify Tri-M‘s compliance with the PWL, and requested and timely received Tri-M‘s daily logs and sworn payroll reports for employees working on the Project. He also confirmed with the Delaware Apprenticeship and Training Department that Tri-M did not have an apprentice program registered in Delaware. This necessarily meant that Tri-M‘s apprentices were not Delaware-registered apprentices. Tri-M‘s CFO inquired about registering Tri-M‘s apprentices in Delaware, but was informed that Delaware requires an apprentice program sponsor to maintain a permanent place of business in Delaware.10
Tri-M‘s records indicated that it paid its Pennsylvania-registered apprentices the Delaware-registered apprentice rate, rather than the mechanic‘s rate applicable to non-Delaware-registered apprentices. As a result, DDOL informed Tri-M that it was in violation of the PWL and DPWR for failing to pay the applicable higher prevailing wage rates. Tri-M was thus required to conduct a self-audit and pay any wage deficiencies to the Pennsylvania-registered apprentices who incorrectly received the lower apprentice rate, instead of the higher mechanic‘s rate. Tri-M provided DDOL with documentation regarding its self-audit, including the amounts needed to bring each employee‘s pay up to the mechanic‘s prevailing wage rate, and timely reimbursed the six Pennsylvania-registered apprentices working on the Project who were not recognized as apprentices under Delaware law.11
Subsequently, Tri-M brought an action for declaratory and injunctive relief against then-Secretary of the Delaware Department of Labor Thomas Sharp, alleging that DDOL discriminated against Tri-M and other out-of-state contractors by refusing to recognize their out-of-state registered apprentices for purposes of the PWL and DPWR. At the conclusion of discovery, the District Court granted summary judgment to Tri-M, and this appeal followed.
DDOL raises three primary arguments on appeal. First, DDOL contends that the State‘s challenged procurement scheme—including the permanent place of business requirement—does not discriminate against interstate commerce, and is, therefore, not violative of the dormant Commerce Clause. Second, DDOL posits that the contested apprentice program regulations were explicitly authorized by Congress and approved by the United States Department of Labor, thus negating any conflict with the Commerce Clause. Finally, DDOL argues, for the first time on appeal, that even assuming arguendo that the challenged regulatory scheme is discriminatory, its attachment of prevailing
Jurisdiction and Standard of Review
The District Court exercised federal subject matter jurisdiction over Tri-M‘s complaint pursuant to
Discussion
We are asked to decide whether Delaware‘s differentiated prevailing wage regulations interfere with interstate commerce in violation of the Commerce Clause. See
In deciding this threshold question, however, we must first confront a preliminary issue, namely, whether DDOL can avail itself of the market participant
Nonetheless, we will still address arguments raised for the first time on appeal in “exceptional circumstances,” and note that “‘the matter of what questions may be taken up and resolved for the first time on appeal is one left primarily to the discretion of the courts of appeals, to be exercised on the facts of individual cases.‘” Council of Alter. Pol. Parties v. Hooks, 179 F.3d 64, 69 (3d Cir.1999) (quoting Singleton v. Wulff, 428 U.S. 106, 121, 96 S.Ct. 2868, 49 L.Ed.2d 826 (1976)); see also Selected Risks Ins. Co. v. Bruno, 718 F.2d 67, 69 (3d Cir.1983) (noting that waiver rule “is one of discretion rather than jurisdiction“). Indeed, the waiver principle “is only a rule of practice and may be relaxed whenever the public interest or justice so warrants.” Franki Found. Co. v. Alger-Rau & Assoc., Inc., 513 F.2d 581, 586 (3d Cir.1975); See also Barefoot Architect, Inc. v. Bunge, 632 F.3d 822, 834-35 (3d Cir.2011) (same); Rogers v. Larson, 563 F.2d 617, 620 n. 4 (3d Cir.1977) (same).13
We think the “public interest” weighs heavily toward our consideration of the market participant issue. Specifically, the District Court‘s decision calls into doubt the constitutionality of the Delaware regulatory scheme, as well as the public works procurement laws of approximately 37 other states.14 The market participant doctrine impacts the labor and wage conditions attendant to every public works contract in Delaware, and invites legal challenges to the procurement schemes of every similarly-situated state. As DDOL suggests, this legal dispute entails crucial and unresolved issues of state sovereignty and state procurement spending, and tests the limits of the dormant Commerce Clause in this field.15
We have previously stated that an argument omitted before the district court may nevertheless be considered where it “is closely related to arguments that [the parties] did raise in that court.” Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir.2005). Most recently, we declined to apply the waiver rule formalistically where a party neglected to adequately press a claim under
Moreover, as in Bunge, from a public policy standpoint, we think “[t]he public interest is better served by addressing [this issue] than by ignoring it.” Id. In its most recent decision concerning the dormant Commerce Clause, the Supreme Court observed that it granted certiorari to address a legal decision that “cast[] constitutional doubt on a tax regime adopted by a majority of the States,” finding the matter “raised [] an important question of constitutional law.” Dep‘t of Rev. v. Davis, 553 U.S. 328, 337, 128 S.Ct. 1801, 170 L.Ed.2d 685 (2008). Similarly, the instant appeal “casts constitutional doubt” upon a state procurement scheme “adopted by a majority of the States,” and presents a weighty question of public concern.
Furthermore, application of waiver is not compelled by the primary prudential aims of the waiver rule. “The waiver rule applies with greatest force ‘where the timely raising of the issue would have permitted the parties to develop a factual record.‘” Id. (citation omitted). Accord-
Despite the importance and novelty of the issues implicated by the market participant doctrine, our last decision in the field was issued in 1995. Under Petersen, this itself constitutes an “institutional consideration” warranting timely review.
Neither party disputes the District Court‘s factual findings, nor does either party suggest that further development of the record at the District Court level would assist resolution of this matter. Therefore, we are confronted solely with a pure question of law as to the applicability of the market participant exception.17 See Huber, 469 F.3d at 75 (“[W]e are less inclined to find a waiver when the parties have had the opportunity to offer all the relevant evidence.“). Furthermore, the litigants were afforded ample opportunity to present and develop their legal theories and arguments on the issue, obviating any plausible claim of unfair surprise or prejudice.18
Finally, the judicial interests highlighted by Webb as further justification for the general waiver principle are not undermined by our decision to consider the market participant exception here. See supra. Specifically, by resolving this purely legal question without further unnecessary proceedings before the district court, we will “conserve judicial resources.” Additionally, because we adopt the District Court‘s dormant Commerce Clause analysis, and are not basing our decision on the market participant exception as such, we are not ruling “on grounds that were never urged or argued.” Id.
At bottom, because the parties have fully developed their arguments on appeal and this aspect of the dormant Commerce Clause challenge before us sufficiently implicates the public interest, it is appropriate for us to resolve whether the market participant exception applies.
I. Market Participant Exception
Accordingly, we will first address DDOL‘s claim that in regulating the prevailing wages and imposing the permanent place of business requirement, Delaware acted as a mere participant in the market.
A.
The Commerce Clause of the United States Constitution grants Congress plenary authority to regulate commerce among the states, and “has long been understood to have a ‘negative’ aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce.” Oregon Waste Sys., Inc. v. Dep‘t of Envtl. Quality of Or., 511 U.S. 93, 98, 114 S.Ct. 1345, 128 L.Ed.2d 13 (1994). Where a state restriction discriminates against interstate commerce by providing “differential treatment of in-state and out-of-state economic interests
“Some cases run a different course, however, and an exception covers States that go beyond regulation and themselves ‘participat[e] in the market.‘” Id. at 339, 128 S.Ct. 1801 (quoting Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810, 96 S.Ct. 2488, 49 L.Ed.2d 220 (1976)) (alterations in original). “Nothing in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others.” Alexandria Scrap, 426 U.S. at 810, 96 S.Ct. 2488; see also Atl. Coast, 48 F.3d at 715 (recognizing “exception from the restraints of the dormant Commerce Clause for otherwise discriminatory action taken by a governmental entity in its role as a market participant“). Therefore, “when a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause,” and our “single inquiry” is limited to ascertaining “whether the challenged program constituted direct state participation in the market.” White, 460 U.S. at 208, 103 S.Ct. 1042 (quoting Reeves, 447 U.S. at 436 n. 7, 100 S.Ct. 2271).19
In practice, the Supreme Court has found a state or municipality to act as a market participant where “the government was participating directly in some aspect of the market as a purchaser, seller, or producer, and the alleged discriminatory effects on the interstate market flowed from these market actions.” Atl. Coast, 48 F.3d at 716. The exception was initially described in Alexandria Scrap. 426 U.S. at 797, 96 S.Ct. 2488. There, the Supreme Court upheld a Maryland statute that, in an effort to remove abandoned automobiles from the State‘s roads, promised a cash “bounty” to scrap processors licensed by the state for the destruction of any vehicle previously titled in Maryland, while denying a similar payment to out-of-state processors. Id. at 797, 801, 96 S.Ct. 2488. The Court found that Maryland had “entered into the market itself to bid up the[] price ... as a purchaser,” and was a market participant behaving as a private actor. Id. at 809, 96 S.Ct. 2488. Several years later, the Court reaffirmed the distinction between market participant and market regulator in Reeves, Inc. v. Stake, sustaining South Dakota‘s decision to confine sales of cement by a state-owned and operated cement plant to state residents during a cement shortage. 447 U.S. 429, 431-32, 438, 100 S.Ct. 2271, 65 L.Ed.2d 244 (1980) (emphasizing that a state conducting business as a private actor may “exercise [its] own independent discretion as to parties with whom [it] will deal,” and may preference in-state interests.)
Similarly, in White, the Supreme Court again applied the market participant ex-
Our own jurisprudence reflects limited opportunity to opine regarding the exception. In Swin Resource Systems, Inc. v. Lycoming County, Pa., we upheld a county‘s decision to charge a preferential rate for reception and disposal of waste generated within the county as compared to waste generated outside the vicinity. 883 F.2d 245, 246 (3d Cir.1989). Analogizing to Alexandria Scrap, Reeves, and White, we noted that the pricing scheme did not affect prices outside the direct transactions and reflected permissible restrictions by a market participant upon those it dealt with directly in the marketplace. Id. The subsequent year, in Trojan Technologies v. Pennsylvania, we approved a State procurement law that required all political subdivisions to purchase only American-made steel products. 916 F.2d 903, 904-05 (3d Cir.1990). We noted that, “[a]s the ultimately controlling public purchaser, the Commonwealth enjoys the same right to specify to its suppliers the source of steel to be used in any supplies provided as is enjoyed by similarly situated private purchasers.” Id.
We declined to apply the market participant exception, however, to a state law that permitted state agencies to establish solid waste districts that controlled the flow of all waste within the district to designated disposal facilities within and outside the district and state. Atl. Coast, 48 F.3d at 706-07. We determined that the disposal site designation criteria extended beyond private participation, and, in fact, controlled the conduct of private parties in the market:
When a public entity participates in a market, it may sell and buy what it chooses, to or from whom it chooses, on terms of its choice; its market participation does not, however, confer upon it the right to use its regulatory power to control the actions of others in that market. Id. at 717.
Because the regulations did not “merely determine the manner or conditions under which the government will provide a service, [and] require[d] all participants in the market to purchase the government service,” the state‘s conduct did not fall within the market participant exception.21 Id.; see also United Haulers
More recently, we had occasion to consider the “regulator/market-participant distinction” in the context of federal preemption under the National Labor Relations Act (“NLRA“),
Notably, this reasoning squares with the Supreme Court‘s most recent pronouncement in the field. In Chamber of Commerce of the U.S.A. v. Brown, the Supreme Court declined to find market participation in the preemption context where a California statute imposing a targeted negative restriction on employer speech was neither “‘specifically tailored to one particular job,’ nor a ‘legitimate response to state procurement constraints or to local economic needs.‘” 554 U.S. 60, 70, 128 S.Ct. 2408, 171 L.Ed.2d 264 (2008) (quoting Wisc. Dep‘t of Ind., Labor & Human Relations v. Gould Inc., 475 U.S. 282, 291, 106 S.Ct. 1057, 89 L.Ed.2d 223 (1986)). Where the “legislative purpose is not the efficient procurement of goods and services, but the furtherance of a labor policy,” a state actor is behaving “in its capacity as a regulator rather than a market participant.” Id.
B.
From the foregoing, we can glean several questions a court should ask when conducting the “single inquiry” of determining “whether the challenged program constitute[s] direct state participation in the market,” or market regulation. White, 460 U.S. at 208, 103 S.Ct. 1042. Is the regulation limited to a job or contract in which a governmental entity is engaged? Is the action designed merely to protect or advance a specific proprietary interest? Is it tailored to that interest? Does the government‘s involvement affect only those with whom the entity is dealing in the market, or does it impact others or set broad policies? In reaching the answer, the Court “must consider in each specific context if the government is acting like a private business or a governmental entity.”24 Selevan v. N.Y. Thruway Auth., 584 F.3d 82, 93 (2d Cir.2009).
Here, DDOL urges that Delaware‘s attachment of its prevailing wage conditions to State-funded public works contracts is analogous to a private party‘s attaching labor conditions to private market transactions, and that the State‘s desire to advance policy interests does not preclude the application of the market participant doctrine. Were this an accurate characterization of the state‘s conduct—i.e., merely attaching conditions to private market transactions—we would agree. But it is not. There is nothing in the regulations that could be deemed tailored or targeted to a specific proprietary interest; the conditions do not attach to a specific job or contract in which the government is engaged. To the contrary, unlike the factual circumstances considered by the Supreme Court in Alexandria Scrap, Reeves, and White, and by our own Court in Swin and Trojan, the disputed prevailing wage conditions here are part of an expansive regulatory scheme that controls the market activities of private participants; this involvement clearly reflects a governmental interest in setting labor policy, rather than merely impacting the state‘s own participation in the market.
As an initial matter, the apprenticeship regulations sweep broadly. They are not limited in scope only to contracts in which
This admission followed DDOL‘s earlier concession before the District Court that DDOL‘s ability to monitor and inspect apprenticeship program resident sponsors—through on-site visits—and to enforce the apprenticeship wage and training requirements was “not limited to public works projects,” and could potentially extend to private projects outside Delaware.25 (See Sharp‘s Opening Br. in Support of Mot. for Sum. Judg. at 22.) In this regard, “the funding condition [is not] ‘specifically tailored’ to the proprietary interest,” and Delaware is not so much participating in the market as it is regulating the market as a whole. Hotel Empls., 390 F.3d at 215.
In Wyoming v. Oklahoma, 502 U.S. 437, 456, 112 S.Ct. 789, 117 L.Ed.2d 1 (1992), the Supreme Court invalidated a state statute that required all Oklahoma electricity plants to use at least 10% Oklahoma coal. Although the Court acknowledged that the state was participating in the market by purchasing coal for its own plant, the Court found the market participant exception inapplicable because the law also regulated the purchasing behavior of private plants. Id.; see also SSC Corp. v. Town of Smithtown, 66 F.3d 502, 513 (2d Cir.1995) (discussing Wyoming, and noting that “simply because Oklahoma was in one respect a ‘participant’ in the coal market did not mean that in all respects its activity affecting the coal market constituted ‘market participation’ “) (emphasis in original). As in Wyoming, while DDOL may at times participate in the market by directly procuring labor for public works projects, it also regulates the apprentice wages and apprenticeship programs implemented by registered sponsors regardless of whether such sponsors are performing on private contracts devoid of the State‘s direct involvement as a “purchaser, seller, or producer.” See Atl. Coast, 48 F.3d at 717. In this respect, the prevailing wage conditions at issue exceed the bounds of the State‘s direct participation and affect the purchasing behavior of private parties. As such, the regulatory scheme “confer[s] upon [DDOL] the right to use its regulatory power to control the actions of others in [the] market,” and “w[as] thus promulgated by [Delaware] in its role as a market regulator, not in its capacity as a market participant.” Id.
Several cases addressing comparable prevailing wage laws of other states bolster this conclusion. In addressing the Pennsylvania Prevailing Wage Act,
In an analogous decision, the Ninth Circuit addressed the payment of prevailing wages pursuant to California‘s apprenticeship regulations, observing:
The State did not merely create apprenticeship standards in its contract with [Plaintiff] nor were the apprenticeship standards in this case created based upon unique needs that the detention facility project presented. The apprentice prevailing wage law applies uniformly to all public works contracts executed in the State of California and is a mechanism through which the State regulates apprenticeship programs and the employment of apprentices on public works projects. As this court has stated previously: “The state‘s involvement does not end with the awarding of the contract. Section 1777.5 is aimed at regulating contractors who work on public contracts.” Dillingham Constr. N.A., Inc. v. County of Sonoma, 190 F.3d 1034, 1038 (9th Cir.1999) (citation omitted) (emphasis added).
Consequently, the Ninth Circuit found the apprenticeship prevailing wage law to constitute “state regulation” of public works projects, rather than market participation. Id.
As in the latter cases, identical governmental objectives underlie the enactment of the Delaware Prevailing Wage regulations here. See
Another factor distinguishes the instant statutory regime from those that reflect mere market participation by private actors: the potential civil penalty threatened by the State for failure to comply with the prevailing wage conditions. The Delaware Code provides that “any employer who knowingly fails () to pay the prevailing wage rates provided for under this section shall, for each such violation, be subject to a civil penalty of not less than $1,000 nor more than $5,000 for each violation.”
“A governmental entity acts as a market regulator when it employs tools in pursuit of compliance that no private actor could wield, such as the threat of civil fines....” United Haulers, 438 F.3d at 157 (citing SSC Corp., 66 F.3d at 513) (emphasis added). In addressing the “regulator/market-participant distinction,” we have noted with approval a Ninth Circuit decision that found, inter alia, the inclusion of a civil penalties provision in a state statute as indicative that the section constituted a regulatory measure outside the bounds of the market participant exception. Hotel Empls., 390 F.3d at 215 (discussing United States v. Lockyer, 364 F.3d 1154, 1163 (9th Cir.2004)); see also Incorp. Vil. of Rockville Centre v. Town of Hempstead, 196 F.3d 395, 399 (2d Cir.1999) (“[W]hen the state avails itself of the unique powers or special leverage it enjoys by virtue of its status as sovereign, it is ‘engaging in market regulation.’ “) (citation omitted). Where the state relies on its coercive power to effectuate compliance
Finally, we are guided by the Supreme Court‘s recent reminder of a central theme running through its market participation jurisprudence; one that is noticeably absent here:
In each of the [market participation] cases the commercial activities by the governments and their regulatory efforts complemented each other in some way, and in each of them the fact of tying the regulation to the public object of the foray into the market was understood to give the regulation a civic objective different from the discrimination traditionally held to be unlawful: in the paradigm of unconstitutional discrimination the law chills interstate activity by creating a commercial advantage for goods or services marketed by local private actors, not by governments and those they employ to fulfill their civic objectives. Davis, 553 U.S. at 347, 128 S.Ct. 1801 (emphasis added).
Unlike the important civic considerations that animated the governmental favoritism in other cases—unemployment and disenfranchisement in White, limited natural resources in Reeves, or environmental pollution in Alexandria Scrap—DDOL‘s “civic objective” in crafting the permanent place of business requirement here was protectionist—or retaliatory—in nature. See infra; see also Tri-M Group, 705 F.Supp.2d at 345-46 (summarizing testimonial evidence showing that Delaware‘s permanent place of business requirement was enacted to retaliate against Pennsylvania for failing to recognize Delaware-registered apprentices). Indeed, the regulatory scheme here appears to fall “within the forbidden paradigm” precisely because the state‘s participation creates “a commercial advantage for goods or services marketed by local private actors.” Davis, 553 U.S. at 348, 128 S.Ct. 1801.
Despite its legitimate and considerable investment in procurement, DDOL acted as a market regulator in promulgating expansive labor regulations that control apprenticeship training and wage scales for all apprenticeship program sponsors, regardless of the State‘s direct participation in the market. Accordingly, the PWL and ATRR are subject to review for potentially imposing an undue burden on interstate commerce in contravention of the dormant Commerce Clause. See White, 460 U.S. at 210, 103 S.Ct. 1042.
II. Dormant Commerce Clause Review
The dormant Commerce Clause “prohibits the states from imposing restrictions that benefit in-state economic interests at out-of-state interests’ expense, thus reinforcing ‘the principle of the unitary national market.‘” Cloverland-Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 298 F.3d 201, 210 (3d Cir.2002) (“Cloverland I“) (quoting West Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 192-93, 114 S.Ct. 2205, 129 L.Ed.2d 157 (1994)).27 States “cannot impede free mar-
To decide that Delaware‘s permanent place of business requirement violates the dormant Commerce Clause, we must first assess “whether the state regulation at issue discriminates against interstate commerce ‘either on its face or in practical effect.‘” Id. (quoting Maine v. Taylor, 477 U.S. 131, 138, 106 S.Ct. 2440, 91 L.Ed.2d 110 (1986)); see also Am. Trucking Ass‘n, Inc. v. Whitman, 437 F.3d 313, 319 (3d Cir.2006) (“[T]he level of scrutiny to be applied ... is contingent upon whether the court finds that the statute or regulation is discriminatory“).28 Where a regulation discriminates against interstate commerce in favor of local business, such protectionism “is per se invalid, save in a narrow class of cases in which the [State] can demonstrate, under rigorous scrutiny, that it has no other means to advance a legitimate local interest.” Cloverland I, 298 F.3d at 211; see also Cloverland-Green Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 462 F.3d 249, 262 (3d Cir.2006) (“Cloverland II“) (“Any statute that discriminates against interstate commerce on its face or in effect is thus subject to heightened scrutiny“) (quotations and citation omitted).
If, however, the state regulation is not discriminatory and “regulates even-handedly” with merely “incidental” burdens upon interstate commerce, it is subject to a “balancing test whereby the statute must be upheld unless the burden imposed on interstate commerce is ‘clearly excessive in relation to the putative local benefits.‘” Cloverland I, 298 F.3d at 211 (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970)); Davis, 553 U.S. at 339, 128 S.Ct. 1801 (same).
Here, the District Court found Delaware‘s statutory scheme to be discriminatory on its face, and we are not persuaded otherwise. DDOL contends repeatedly throughout its briefing that the regulatory regime is not discriminatory since it applies to all program sponsors regardless of state residency. Yet the District Court correctly observed that the ATRR “contain an express in-state presence requirement: a ‘registrant’ sponsor must ‘regularly maintain[ ] a place of business in Delaware’ that is not a site trailer, temporary structure, or post office box.” Tri-M Group, 705 F.Supp.2d at 344 (quoting
Our conclusion here is informed by the Supreme Court‘s reasoning in Granholm, which rejected a New York state law requiring out-of-state wineries to establish a branch factory, office, or storeroom in the state in order to ship wine directly to New York consumers. 544 U.S. at 470, 125 S.Ct. 1885. At the same time, in-state wineries received the same shipping privileges simply by applying for a license. Id. Finding that the extra step of establishing an office for out-of-state wineries “[drove] up the cost of their wine,” the Supreme Court found New York‘s “in-state presence requirement” discriminatory and applied heightened scrutiny, noting that such discrimination “runs contrary to our admonition that States cannot require an out-of-state firm ‘to become a resident in order to compete on equal terms.’ ” Id. at 474-75, 125 S.Ct. 1885 (quoting Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 72, 83 S.Ct. 1201, 10 L.Ed.2d 202 (1963)). Echoing this holding, we subsequently noted that “statutes that increase out-of-state competitors’ costs are subject to heightened scrutiny under the Commerce Clause.” Am. Trucking, 437 F.3d at 322.
The instant regulations explicitly treat in-state and out-of-state economic interests differently by compelling out-of-state contractors “to become () resident(s) in order to compete on equal terms.” Granholm, 544 U.S. at 474-75, 125 S.Ct. 1885. Contrary to DDOL‘s misleading assertion that Tri-M voluntarily chose not to subject its apprenticeship program to DDOL oversight and regulation, Tri-M‘s purported “choice” in the matter would entail an assumption of costs not imposed upon in-state contractors. Accordingly, the regulations effectuate a protectionist bias against out-of-state contractors and are subject to heightened scrutiny.29
Once the party challenging the statute meets its burden of showing discriminatory design or effect, the burden shifts to the State to demonstrate ” 1) that the statute serves a legitimate local interest, and 2) that this purpose could not be served as well by available non-discriminatory means.” Freeman v. Corzine, 629 F.3d 146, 158 (3d Cir.2010) (quoting Am. Trucking, 437 F.3d at 319). Moreover, the “absence of evidence is dispositive, because ‘[t]he burden is on the State to show that the discrimination is demonstrably justified,’ and we may [u]phold state regulations that discriminate against interstate commerce only after finding, based on concrete record evidence, that a state‘s nondiscriminatory alternatives will prove unworkable.” Id. at 161 (quoting Granholm, 544 U.S. at 492-93, 125 S.Ct. 1885) (emphasis and alterations in original).
DDOL contends that it has a legitimate interest in safeguarding the safety and welfare of all apprentices by requiring a permanent place of business in Delaware, and that it lacks the resources to effectively monitor out-of-state apprenticeship programs for compliance with the Delaware standards. Its position is belied, however, by the State‘s conduct in this case, as well as the evidentiary history of the regulations at issue. The evidence
Moreover, as the District Court concluded, the demonstrated existence of non-discriminatory alternatives for ensuring the safety and training of apprentices did not overcome the per se invalidity presumption applicable to discriminatory regulations. Tri-M‘s lack of a permanent place of business in Delaware did not prevent DDOL from conducting a thorough investigation to ensure Tri-M‘s compliance with the PWL and ATRR. See id. (“In essence, defendant argues that the DDOL cannot take out-of-state companies at their word, but did exactly that with respect to its investigation of plaintiff.“). Indeed, other than a few conclusory statements to that effect, DDOL advanced no evidence to support its contention that monitoring out-of-state contractors working on in-state public projects is any more difficult than for in-state contractors, much less that such oversight is “unworkable,” as Granholm requires. See 544 U.S. at 493, 125 S.Ct. 1885. Indeed, we find the record devoid of evidence to substantiate DDOL‘s assertion that it could not verify out-of-state work standards through postal or electronic transmission of “certified payrolls, tax records, or other documentation as compared to a personal inspection of the apprentice‘s out-of-state work job site.” See Tri-M Group, 705 F.Supp.2d at 346.
The “Commerce Clause cases demand more than mere speculation to support discrimination against out-of-state [interests].” Granholm, 544 U.S. at 492, 125 S.Ct. 1885. DDOL‘s vague and unsubstantiated justifications for the discriminatory regulations failed to clear this hurdle, and we can discern no evidence confirming that the permanent place of business requirement actually advances legitimate interests or that “nondiscriminatory alternatives will prove unworkable.”30 See Freeman, 629 F.3d at 161. Accordingly, we conclude that the disputed regulations do not withstand heightened scrutiny and violate the dormant Commerce Clause.
III. Congressional Authorization of the Discriminatory Regulatory Scheme
Finally, we consider DDOL‘s argument that Congress and the United States Department of Labor (“USDOL“) expressly approved the challenged state regulation, thus removing any objection under the dormant Commerce Clause. The District Court rejected this argument, finding DDOL‘s “assertion that Congress‘s empowerment of the USDOL with ‘regulatory power’ somehow nullifies the dormant commerce clause issue presented in this
It is well established that “Congress can authorize states to impose restrictions that the dormant Commerce Clause would otherwise forbid.” Cloverland I, 298 F.3d at 210 n. 13; see also Pic-A-State Pa., Inc. v. Reno, 76 F.3d 1294, 1304 (3d Cir.1996) (“Congress may consent to state regulation that discriminates against interstate commerce.“) (citation omitted). “When Congress so chooses, state actions which it plainly authorizes are invulnerable to constitutional attack” since Congress‘s commerce power in such instances is “not dormant, but has been exercised by that body.” Northeast Bancorp, Inc. v. Bd. of Gov‘rs of Fed. Res. Sys., 472 U.S. 159, 174, 105 S.Ct. 2545, 86 L.Ed.2d 112 (1985); see also Life Partners, Inc. v. Morrison, 484 F.3d 284, 291 (4th Cir.2007) (“Congress holds the authority to ‘redefine the distribution of power over interstate commerce’ by ‘permit[ting] the states to regulate the commerce in a manner which would otherwise not be permissible.’ “) (quoting So. Pac. Co. v. Arizona, 325 U.S. 761, 769, 65 S.Ct. 1515, 89 L.Ed. 1915 (1945)).
Importantly, however, congressional consent must be express, and is only evidenced “where Congress has ‘affirmatively contemplate[d] otherwise invalid state legislation,’ and ‘[w]here state or local government action is specifically authorized by Congress.” Norfolk So. Corp. v. Oberly, 822 F.2d 388, 393 (3d Cir.1987) (internal citations omitted). “Because of the important role the Commerce Clause plays in protecting the free flow of interstate trade, [the Supreme] Court has exempted state statutes from the implied limitations of the Clause only when the congressional direction to do so has been ‘unmistakably clear.’ ” Maine, 477 U.S. at 138-39, 106 S.Ct. 2440 (quoting Wunnicke, 467 U.S. at 91, 104 S.Ct. 2237); see also Arab African Intern. Bank v. Epstein, 10 F.3d 168, 172-73 (3d Cir.1993) (“Congress must manifest its unambiguous intent before a federal statute will be read to permit or approve ... a violation of the Commerce Clause.“) (quoting Wyoming, 502 U.S. at 458, 112 S.Ct. 789). Moreover, the state has the “burden of demonstrating a clear and unambiguous intent on behalf of Congress to permit the discrimination against interstate commerce.” Wyoming, 502 U.S. at 458, 112 S.Ct. 789.
DDOL presents the Fitzgerald Act,
In fact, a comparison of the cases relied upon by DDOL is instructive. In Norfolk Southern Corporation v. Oberly, the district court examined whether developmental restrictions in the Delaware Coastal Zone Act were specifically authorized under the federal Coastal Zone Management Act of 1972,
Similarly, in Prudential Insurance Company v. Benjamin, in the context of the McCarron Act,
This jurisprudence makes clear that courts will find congressional authorization to discriminate against interstate commerce only where such behavior is clearly and affirmatively contemplated by Congress, and expressly authorized in the statutory language. See Oberly, 822 F.2d at 393. The regulatory language defining eligibility for apprenticeship program registration that DDOL relies upon does not manifest in an unmistakably clear manner that Congress expressly envisioned or authorized a state to exercise its cooperative apprenticeship regulatory power to discriminate in favor of in-state parties.
Accordingly, we reject DDOL‘s argument that the United States Secretary of Labor‘s recognition of the Delaware apprenticeship agency as conforming with the pertinent implementing regulations immunizes the regulation in dispute from dormant Commerce Clause review. Only “Congress may authorize the States to engage in regulation that the Commerce Clause would otherwise forbid.” Maine, 477 U.S. at 138, 106 S.Ct. 2440. The Fitzgerald Act did not explicitly endow the Secretary with authority to permit discrimination against interstate commerce, and DDOL provided no other basis to conclude that discriminatory regulation may be authorized by a federal agency.
Because Congress did not authorize the discrimination at issue, DDOL‘s regulatory scheme constitutes impermissible discrimination under the dormant Commerce Clause.
Conclusion
For the foregoing reasons, we will affirm the District Court‘s grant of summary judgment in this matter.
HARDIMAN, Circuit Judge, concurring.
I concur in the result in this case. Unlike my colleagues, I would hold that the Delaware Department of Labor (DDOL) forfeited its right to argue on appeal that Delaware acted as a market participant because it failed to raise that argument in the District Court.
I
DDOL provides no explanation for its failure to raise the market participant exception to the Dormant Commerce Clause in the District Court. Nevertheless, the Majority reaches this issue because the appeal “implicates significant issues of state sovereignty” and “raises a pure question of law.” True as these conclusions are, they do not constitute “exceptional circumstances” necessary to overcome DDOL‘s forfeiture of a significant argument that it could have and should have made in the District Court.1
At issue in this appeal are some $10,000 in wages Tri-M paid to six apprentices who worked on a state-sponsored construction project. The project has been completed, so all that remains for adjudication is who must pay this relatively modest sum. In my view, this has little or no effect on the public interest and, regardless of which side prevails, cannot rise to the level of “manifest injustice.” Accordingly, I would not excuse DDOL‘s forfeiture.
If we adhere to our forfeiture doctrine in this appeal, the constitutionality of the Delaware Prevailing Wage Law can be litigated in the next case and DDOL may, if it chooses, raise the market participant exception at that time. If the issue were joined and fully litigated in the District Court, we would have the benefit of a complete record and a reasoned decision by a trial judge.2 Moreover, as the Majority rightly notes, litigants in thirty-seven other states would be free to challenge regulations granting similar benefits to in-state companies. Maj. Op. at 416. As a result, district courts throughout the country would have the opportunity to review the constitutionality of a wide array of state procurement statutes, and in so doing provide appellate courts with a deeper understanding of this unsettled area of the law.3 Cf. Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir.2005) (deciding the merits of a forfeited claim where the “proper resolution of the legal question, though not exactly simple, [wa]s reasonably certain“).
I agree with the Majority that in some cases “the public interest is better served by addressing [an issue] than by ignoring it.” Maj. Op. at 417 (citing Barefoot Architect, Inc. v. Bunge, 632 F.3d 822, 835 (3d Cir.2011)). For instance, in Bagot v. Ashcroft, 398 F.3d 252 (3d Cir.2005), we exercised our discretion to review a deportee‘s claim after finding that “failing to consider Bagot‘s arguments would result in the substantial injustice of deporting an American citizen.” Id. at 256. Similarly, in United States v. Petersen, 622 F.3d 196, 202 n. 4 (3d Cir.2010), we held that, at least where the “public reputation of judicial proceedings” is at stake, we have an “institutional” interest in resolving unsettled questions regarding a defendant‘s trial rights. Id. Finally, in Bunge, we held that inadvertent mistakes, such as a party‘s invocation of “the wrong definition of the tort,” does not necessarily trigger the application of the waiver doctrine. 632 F.3d at 835.
Unlike in Bagot, here I see no exigency that necessitates a prompt resolution of the market participant issue. Indeed, as noted above, a trial court‘s thorough analysis of the legal and factual questions raised on appeal would be tremendously helpful in deciding this difficult issue. Moreover, the “institutional” interest in resolving this issue is minimal. There is no evidence that lower courts are reaching inconsistent results or that states are responding to the legal uncertainty by halting enforcement or repealing regulations that may be discriminatory. The fact that the issue is one of constitutional import does not alone transform it into a matter of public importance, as we have enforced waivers in weightier circumstances, including those affecting constitutional rights. See e.g., United States v. Lockett, 406 F.3d 207, 212 (3d Cir.2005) (holding that defendant waived his legal argument for “limited consent” under the Fourth and Fourteenth Amendments by failing to raise it before the district court); Brennan v. Norton, 350 F.3d 399, 418 (3d Cir.2003) (finding that defendant waived his legal argument for relief under the Petition Clause).
Finally, there is no evidence in this record to suggest that Delaware‘s failure to raise the market participant issue was inadvertent. Cf. Bunge, 632 F.3d at 834-35. Indeed, given that the market participant doctrine has long been a recognized exception to the dormant Commerce Clause, it is unlikely that counsel for DDOL simply missed the issue. The DDOL could just as plausibly have decided to pursue an alternative theory after evaluating the relative merits of the arguments. See United States v. Nee, 261 F.3d 79, 86 (1st Cir. 2001) (“Th[e] ‘raise-or-waive rule’ prevents sandbagging; for instance, it precludes a party from making a tactical decision to refrain from objecting, and subsequently, should the case turn sour, assigning error.“) (citation omitted). Just as private litigants may not “jump from theory to theory like a bee buzzing from flower to flower,” United States v. Rose, 538 F.3d 175, 180 (3d Cir.2008) (internal citations and quotations marks omitted), a state should not be permitted to do so in the absence of truly exceptional circumstances.
For these reasons, I concur in the Court‘s judgment.