Metro. Wash. Chapter, Associated Builders & Contractors, Inc. v. Dist. of Columbia

• Decision Date: 30 December 2021
• Docket Number: 12-cv-853 (EGS)
• Citation: 578 F.Supp.3d 7
• Parties: METROPOLITAN WASHINGTON CHAPTER, ASSOCIATED BUILDERS AND CONTRACTORS, INC., et al., Plaintiffs, v. DISTRICT OF COLUMBIA, et al., Defendants.
• Court: U.S. District Court — District of Columbia

578 F.Supp.3d 7

METROPOLITAN WASHINGTON CHAPTER, ASSOCIATED BUILDERS AND CONTRACTORS, INC., et al., Plaintiffs,

v.DISTRICT OF COLUMBIA, et al., Defendants.

No. 12-cv-853 (EGS)

United States District Court, District of Columbia.

Signed December 30, 2021

Paul J. Kiernan, Christine N. Walz, Karen Boyd Williams, Holland & Knight LLP, Washington, DC, for Plaintiffs Metropolitan Washington Chapter, Associated Builders and Contractors, Inc., Miller & Long Concrete Construction, Inc., Emmett Morris, Jr.

Chad Wayne Copeland, Conrad Z. Risher, Andrew J. Saindon, Office of Attorney General/DC, Public Interest Division, Washington, DC, for Defendants District of Columbia, Muriel Bowser.

MEMORANDUM OPINION

Emmet G. Sullivan, United States District Judge

I. Introduction

Plaintiffs Metropolitan Washington Chapter, Associated Builders and Contractors, Inc. ("Association"); Miller & Long Concrete Construction, Inc. ("Miller & Long"); Emmett Morris, Jr.; and Dairon Upshur (collectively "Plaintiffs") bring this action against Defendants District of Columbia and Mayor Muriel Bowser (collectively "Defendants" or the "District") alleging that the District's First Source Employment Agreement Act of 1984, as amended by the Workforce Intermediary Establishment and Reform of First Source Amendment Act of 2011, D.C. Code § 2-219.01 et. seq. , (hereinafter "First Source Act" or "Act") discriminates against nonresidents of the District of Columbia in violation of Plaintiffs’ Substantive Due Process rights under the U.S. Constitution's Fifth Amendment incorporation of the protections of the Privileges and Immunities Clause. Pending before the Court are the parties’ cross motions for summary judgment. See Defs.’ Mot., ECF No. 63;¹ Pls.’ Mot., ECF No. 65. The Court has carefully considered the motions, oppositions, replies thereto, the supplement and response thereto, the applicable law, and the entire record herein. For the reasons explained below, the Court GRANTS Defendants’ Motion for Summary Judgment, ECF No. 63; and DENIES Plaintiffs’ Cross Motion for Summary Judgment, ECF No. 65.

II. Background

Much of the relevant background concerning the District of Columbia's unique position as the "only jurisdiction in the country that is legally barred from imposing a commuter tax on non-residents who come into the city to work" was described in this Court's Memorandum Opinion responding to the District's Motion to Dismiss. See Metro. Washington Chapter v. D.C. ("MTD Mem. Op.") , 57 F. Supp. 3d 1, 7 (D.D.C. 2014). The Court will briefly summarize the facts relevant to the pending motions, and then set forth the procedural background.

A. Factual Background

Except where indicated, the following facts are not in dispute. The First Source Act traces its roots to the District of Columbia Mayor's Order 83-265, signed by Mayor Marion Barry in 1983. See Pls.’ Statement of Material Facts ("SOMF"), ECF No. 65-1 at 7-8 ¶¶ 12-14; Defs.’ Resp. to Pls.’ SOMF, ECF No. 67-2 at 4 ¶¶ 12-14; Employment Agreement Goals and Objectives for All District of Columbia Projects , District of Columbia Mayor's Order, No. 83-265 (Nov. 9, 1983) ("Mayor's Order"), ECF No. 65-4. Under the Mayor's Order "any project funded ... [by] District of Columbia funds ... [had to] reflect the goal of ... enhanc[ing] business and economic development by increasing jobs for District residents and broadening the District of Columbia's tax base." Id. To reflect this goal, agreements with the District were required to contain the following:

[G]oals and objectives for utilization of bona fide residents of the District of Columbia in each project's labor force:

(a) At least fifty-one percent of all jobs created are to be performed by employees who are residents of the District of Columbia.

(b) At least fifty-one percent of apprentices and trainees employed shall be residents of the District of Columbia registered in programs approved by the D.C. Apprenticeship Council.

Id. The Mayor's Order was a precursor to the District's First Source Employment Agreement Act of 1984, formerly codified as D.C. Law 5-93. See Testimony of Drew Hubbard, Former Associate Director at the District's Department of Employment Services ("DOES") and Former Legislative Aide with the District of Columbia City Council ("Hubbard Test."), ECF No. 73-4 at 7 at 21:1-22:19. In the ensuing years, prior to the adoption of the Amended Act, there were no penalties imposed for violations of the original, 1984 Act. See Pls.’ SOMF, ECF No. 65-1 at 8 ¶ 16; Hubbard Test., ECF No. 73-4 at 21 at 77:20-78:5.

In 2011, Bill 19-50, entitled the Workforce Intermediary Establishment and Reform of First Source Amendment Act of 2011 was introduced. See Michael Brown, Chair Council of The D.C. Comm. on Housing and Workforce Dev. ("Workforce Committee"), Comm. Rep. (2011) ("DCHW Report"), ECF No. 65-3 at 2. The Workforce Committee studied the "issues related [to] the reform of the District's First Source law for over a year." Id. at 3. Throughout this period, the Workforce Committee took in "witness testimony" and "stakeholder feedback", which led the Workforce Committee to conclude that new legislation was needed because, inter alia ,

1. High levels of unemployment have persisted citywide for multiple years ...;

2. Sustained high levels of unemployment typically lead to severe financial hardships for those affected;

3. In the District ... the Food Stamp program has increased by 54% ...; the TANF caseload has increased by 18% ...; the combined Medicaid and Healthcare Alliance caseload increased by 16% ...; the number of homeless residents accessing services from [the District's] continuum of care has increased by 20% ...; and the number of residents living in deep poverty (incomes less than half of the federal poverty rate or $11,000 a year for a family of 4) has increased by 37% ...;

4. [T]here are over 700,000 jobs in the District and yet approximately 72% of those jobs are held by people living outside of the city's borders;

5. The District's Congressionally-imposed ban on taxing any of the income that leaves the city means that the District is subsidizing surrounding jurisdictions to the tune of $1 billion to $2 billion a year in lost revenue; and

6. [E]nforcement and applying proscribed penalties [of the 1984 Act] is nearly impossible because showing evidence of noncompliance with the statute's ‘best efforts’ to meet the 51% new hire requirement is a very low legal standard.

Id. at 4-5 (internal quotation marks omitted). In addition, the Workforce Committee found that with "more than 70% of [the District's] jobs ... filled by nonresidents ... coupled with city's inability to tax the income of nonresidents, along with several other related negative indicators, support[ed] the argument" that its law was constitutionally valid. Id. at 10.

The D.C. City Council eventually passed the Amended Act, which became effective on February 24, 2012. Pls.’ SOMF, ECF No. 65-1 at 8 ¶ 17; Defs.’ Resp. to Pls.’ SOMF, ECF No. 67-2 at 4 ¶ 17. After the Act became effective, it was "transmitted to Congress for review" on March 23, 2012. Defs.’ Mot., ECF No. 63 at 10. In its current form, the Mayor is required to maintain the "First Source Register," which "is the Department of Employment Services Automated Applicant File, which consists of the names of unemployed District residents registered with the Department of Employment Services." D.C. Code § 2-219.02(a). Under the law,

(a) The Mayor shall include for every government-assisted project or contract a requirement that the beneficiary enter into an employment agreement with the District of Columbia government which states that:

(1) The first source for finding employees to fill all jobs created by the government-assisted project or contract will be the First Source Register; and

(2) The first source for finding employees to fill any vacancy occurring in all jobs covered by an employment agreement will be the First Source Register.

(b) In selecting unemployed District residents from the First Source Register for interviews for all jobs covered by each employment agreement, the Mayor shall:

(1) Give first preference to unemployed District residents pursuant to § 2-219.01(6)(A) ; and

(2) Give second preference to unemployed District residents pursuant to § 2-219.01(6)(B).

D.C. Code § 2-219.03(a). In addition, for any project totaling between $300,000 and $5,000,000, the Mayor must also include a "provision that at least 51% of the new employees hired to work on the project or contract shall be District residents," see D.C. Code § 2-219.03(e) ; and for projects totaling $5 million or more, the Mayor must include a provision requiring that at least "20% of journey worker hours by trade", "60% of apprentice hours by trade", "51% of the skilled laborer hours by trade", and "70% of common laborer hours" shall be performed by District residents. D.C. Code § 2-219.03(e)(1A)(A).

If a beneficiary is unsuccessful in meeting its First Source Law requirements, it can request a waiver if, inter alia , DOES certifies that (1) the beneficiary made a "good-faith effort to comply" or (2) "there are insufficient eligible applicants from the First Source Register that possess the skills required by the position." D.C. Code § 2-219.03(e)(3)(A).

On the other hand, if the beneficiary fails "to meet the required hiring requirements" and fails "to receive a good-faith waiver" the District may impose "a penalty equal to ? of 1% of the total amount of the direct and indirect labor costs of the project or contract for each percentage by which the beneficiary fails to meet the hiring requirements." D.C. Code § 2-219.03(e)(4)(A). Further, if the beneficiary is found to be in "willful breach of the employment agreement," fails "to submit the required hiring compliance report", or deliberately submits "falsified data," the District can impose a "monetary fine of 5% of the total amount of the direct and indirect labor costs of the project or contract, in addition to...