Matrix Dev. Grp. v. City of Newark

Decision Date30 July 2021
Docket Number2:20-cv-03166 (BRM) (ESK)
CourtU.S. District Court — District of New Jersey



HON BRIAN R. MARTINOTTI, United States District Judge.

Before this Court are three Motions: (1) Defendant City of Newark's (Newark) Motion to Dismiss (ECF No. 14) Matrix Development Group and Fidelco Realty Group's (Plaintiffs) Complaint (ECF No. 1) (2) Intervenor-Defendant Essex County Building and Construction Trades Council's (Essex) (together with Newark, Defendants) Motion to Dismiss (ECF No. 15) Plaintiffs' Complaint; and (3) Plaintiffs' Cross Motion for Judgment on the Pleadings (ECF No. 19). Plaintiffs oppose both Motions to Dismiss. (ECF No. 16.) Having reviewed the parties' submissions filed in connection with the Motions and having declined to hold oral argument pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below, and for good cause shown, the Defendants' Motions to Dismiss are GRANTED and Plaintiffs' Motion for Judgment on the Pleadings is DENIED.

I. Background

For the purposes of the Motions to Dismiss, the Court accepts the factual allegations in the Complaint as true and draws all inferences in the light most favorable to Plaintiffs. See Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008). Further, the Court also considers any “document integral to or explicitly relied upon in the complaint.” In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir. 1997).

Plaintiffs are real estate developers with properties and potential projects in Newark. (ECF No. 1 ¶ 1.) Plaintiffs challenge an ordinance adopted by Newark (the “Ordinance”) that “purports to impose specific requirements, including a Project Labor Agreement (‘PLA') and Apprenticeship Program that exponentially increase the costs of the projects” falling under the Ordinance's reach. (Id.) Newark enacted the Ordinance on October 2, 2019. (Id. ¶ 7.) Plaintiffs attached the Ordinance to the Complaint as Exhibit A and have also cited portions of the Ordinance in the Complaint. (Id.) Accordingly, the Court will consider the Ordinance for the Motions to Dismiss.

Section 2:4-22D.2 of the Ordinance provides:

All Redevelopment projects and all requests for proposals, specifications and final contracts for Public Works Projects shall require the execution of a Project Labor Agreement that complies with the requirements of this Section, unless the Business Administrator determines, taking into consideration the amount of City financial resources required and the increased cost and feasibility challenges that would result to the Project, the nature, phasing, size and complexity of the project, including the height of the buildings, the presence or absence of elevators and the utilization or non-utilization of steel, that a Project Labor Agreement is not appropriate. In all cases, the Project Labor Agreement must advance the interests of the City of Newark, including cost, efficiency, quality, time, time lines and need for a skilled labor force and safety.

(Id. ¶ 8.) The Ordinance defines a “Redevelopment Project” as:

[A] project, including demolition and hazardous materials abatement, that has an estimated total construction cost that is equal to or exceeds Twenty-Five Million Dollars and Zero Cents ($25, 000, 000), exclusive of any land acquisition costs, for which the City has (1) granted a tax abatement pursuant to the Five-Year Exemption and Abatement Law, N.J.S.A. 40A:20-1 et seq., and (2) granted some form of Redevelopment Area Financing, such as but not limited to the Redevelopment Area Bond Financing Law, N.J.S.A. 40A:12A-64, et seq. (the “RAB Law”), capital financing pursuant to the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1, et seq., a Community Development Block Grant (CDBG), a direct payment by the City in the form of rent or any other municipal or UEZ capital financing/funding.

(Id. ¶ 9.)

The Ordinance imposes “certain requirements on Redevelopment Projects that fall within its purview, including a Project Labor Agreement (‘PLA') and Apprenticeship Program.” (Id. ¶ 12.) A PLA is defined as “a pre-hire collective bargaining agreement between a Labor Organization and the City of Newark or a Developer, as the situation dictates, that contains at a minimum the requirements set forth” throughout the Ordinance. (Id. ¶ 13.) Some of the requirements for a qualifying PLA include:

A. A guarantee that there will be no strikes, lock-outs or other similar actions.
B. Set forth effective, immediate and mutually binding procedures for resolving jurisdictional and labor disputes arising before the completion of the work.
C. A provision to bind all contractors, and subcontractors on the project in all relevant documents, including bid specifications.
D. Evidence that each contractor and subcontractor working on the project has an Apprenticeship Program.
E. A requirement that twenty (20%) percent of the labor hours required shall be performed by Apprentices and that one hundred (100%) percent of the Apprentices shall be Newark residents. . . .
G. State that contractors and subcontractors need not be a party to a Labor Agreement with the applicable labor organization other than for the project covered by the Project Labor Agreement . . . .

(Id. ¶ 14.)

The Ordinance defines an “Apprentice” as “a worker who participates in a Federal Apprenticeship Program and receives benefits and pay not less than those received by an apprentice.” (Id. ¶ 15.) An “Apprenticeship Program” means an “apprenticeship program providing to each trainee combined classroom and on-the-job training under the direct and close supervision of a highly skilled worker . . . and registered by the Bureau of Apprenticeship and Training of the U.S. Department of Labor and meeting the standards established by the Bureau.” (Id.) Lastly, Section 2:4-22D.5 permits Newark to undertake the following remedies if a Developer fails to comply with the Ordinance: (1) suspend or terminate the contract, grant, subsidy agreement or tax abatement agreement in question; (2) for public construction projects, debarring the Developer, Contractor or Subcontractor from eligibility for future City contracts; and (3) such other remedies available at law or in equity. (Id. ¶ 16.)

Plaintiffs allege the PLA requirement contained in the Ordinance creates significant obstacles to the Plaintiffs' ability to pursue and construct redevelopment projects. (Id. ¶ 17.) These obstacles play out as substantial additional costs that leave Plaintiffs on an uneven playing field with unionized contractors. (Id.) According to Plaintiffs, they do not have established collective bargaining relationships, would experience a 20% or more increase in labor costs, would be required to hire employees through a union hiring hall in accordance with hall hiring rules, and would be similarly restricted by the PLA in its hiring of subcontractors. (Id.)

Plaintiffs allege they will be harmed from purchasing and redeveloping property subject to the Ordinance because of the PLA requirement. (Id. ¶¶ 18-19.) Plaintiffs allege they “are ready, willing, and able to purchase properties for redevelopment projects and to construct redevelopment projects on the properties they currently own to which the Ordinance has been or will be applied.” (Id. ¶ 20.) However, Plaintiffs claim the Ordinance would require them to (i) recognize a labor organization as the collective bargaining representative of their respective employees without their employees' consent; (ii) assent to a [PLA] requiring them to be bound by any collective bargaining agreement; and (iii) agree to a collective bargaining agreement containing numerous onerous requirements.” (Id.) Plaintiffs assert the Ordinance will continue to deter them from purchasing properties for redevelopment projects “including those in which the City of Newark has no property or proprietary interest, and is therefore not acting as a ‘market participant.' (Id. ¶ 21.) Plaintiffs also allege “the requirement that all apprentices on projects subject to a PLA be residents of the City of Newark impacts the employment of Plaintiffs' employees.” (Id. ¶ 22.)

Plaintiffs filed their Complaint with this Court on March 23, 2020, alleging National Labor Relations Act (NLRA) Preemption under the Supremacy Clause (Count I); violation of the Privileges/Immunities and/or the Commerce Clause (Count II); Employee Retirement Income Security Act (ERISA) Preemption (Count III); violations of the New Jersey Civil Rights Act and New Jersey State Constitution (Count IV); violations of 42 U.S.C. § 1983 (Count V); and declaratory judgment (Count VI). (See ECF No. 1.) On April 14, 2020, Essex filed a Motion to Intervene (ECF No. 4), which was granted by Magistrate Judge Joseph A. Dickinson on May 22, 2020. (ECF No. 9.) On November 3, 2020, Defendants filed Motions to Dismiss. (ECF Nos. 14, 15.) Also on November 3, 2020, Plaintiffs filed an Opposition to Newark's Motion to Dismiss. (ECF No. 16.) On the same day, Newark filed a Reply (ECF No. 18) and Plaintiffs filed a Cross Motion for Judgment on the Pleadings. (ECF No. 19.) On November 4, 2020, Essex filed a Reply to Plaintiffs' Opposition. (ECF No. 20.)

II. Legal Standards
A. Federal Rule of Civil Procedure 12(c)

Federal Rule of Civil Procedure 12(c) provides: “After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Pursuant to Rule 12(c), the movant for judgment on the pleadings must establish: (1) that no material issue of fact...

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