Rhode Island Hospitality Ass'n v. City of Providence

• Decision Date: 02 December 2011
• Docket Number: No. 11–1415.,11–1415.
• Citation: 192 L.R.R.M. (BNA) 2177,667 F.3d 17
• Parties: RHODE ISLAND HOSPITALITY ASSOCIATION; PRI I, L.P.; PRIXVIII, L.P., Plaintiffs, Appellants, v. CITY OF PROVIDENCE, by and through its Treasurer, James J. LOMBARDI, III, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

192 L.R.R.M. (BNA) 2177

667 F.3d 17

RHODE ISLAND HOSPITALITY ASSOCIATION; PRI I, L.P.; PRIXVIII, L.P., Plaintiffs, Appellants,

v.CITY OF PROVIDENCE, by and through its Treasurer, James J. LOMBARDI, III, Defendant, Appellee.

No. 11–1415.

United States Court of Appeals, First Circuit.

Heard Oct. 4, 2011.Decided Dec. 2, 2011.

Robert P. Brooks, with whom Richard R. Beretta, Jeffrey K. Techentin, Avital R. Chatto, and Adler, Pollock & Sheehan PC were on brief, for appellants.

Anthony F. Cottone, Deputy City Solicitor, with whom Jeffrey M. Padwa, City Solicitor, was on brief, for appellee.

Michael T. Anderson, with whom Murphy Anderson PLLC, Amato A. DeLuca, Jeffrey A. Mega, and DeLuca & Weizenbaum Ltd. were on brief, for Hospitality Employees and Community Organizations, amicus curiae.

Before LYNCH, Chief Judge, BOUDIN and STAHL, Circuit Judges.

LYNCH, Chief Judge.

This case presents the issue of the constitutionality of an ordinance of the City of Providence requiring that, when there is a change in the identity of a hospitality employer, that employer must retain its predecessor's employees, subject to some conditions, for a three-month period. Plaintiffs, in their request for a pre-enforcement declaratory judgment that the ordinance is unlawful, contend that the ordinance is pre-empted under the National Labor Relations Act (NLRA), and violates the Equal Protection Clause and the Contract Clause. The district court rejected plaintiffs' claims. R.I. Hospitality Ass'n v. City of Providence, 775 F.Supp.2d 416 (D.R.I.2011). We affirm.

I.

This suit arises out of Ordinance 467, which was enacted by the City of Providence and regulates segments of the hospitality industry. The initial version of the Ordinance was passed on October 26, 2009; it was substantially amended on November 1, 2010. Providence, R.I., Ordinance 334 (Nov. 1, 2010) (codified at Providence, R.I., Code § 2–18.5). Only the provisions of the amended Ordinance are at issue in this suit.

The preamble to the Ordinance states that it was enacted in response to “the wholesale displacement of employees through transfers of hotel operations in New England in the recent past,” which “has caused great public outcry, and has caused immeasurable damage to the reputation of the tourist industry in the regional economy.” Providence, R.I., Ordinance 334, pmbl. (Nov. 1, 2010). The stated purpose of the Ordinance is “to bolster Providence as a tourist destination, and to promote the stability of Providence's hospitality and tourism businesses.” Providence, R.I., Code § 2–18.5(a).

The Ordinance regulates the “hospitality business,” which includes:

any hotel, motel, resort, boarding house, or bed and breakfast which is kept, used or advertised as, or held out to the public as, a place where sleeping or housekeeping accommodations are supplied for pay to guests ... which is operating within the City of Providence with at least 25 rooms, and any in-house component thereof, including housekeeping services, front desk, laundry, room service, valet, bell desk, restaurant, food and/or beverage service or other operation facilitating guest services....

Id. § 2–18.5(b). At least eight hotels fall within this definition. ¹

The triggering condition for operation of the Ordinance is a “change in the identity of the hospitality employer,” id. § 2–18.5(c)(1), which is defined as “any event or sequence of events (including a purchase, sale, lease, or termination of a management contract or lease) that causes, within a one-year period, the identity of the hospitality employer at a hospitality business to change,” id. § 2–18.5(b). A “hospitality employer” is defined as “a person, whether owner or a manager, who acts as the immediate employer of the employees in a hospitality business.” ² Id.

The Ordinance requires that [i]n the event of a change in the identity of the employer at a hospitality business, the new employer (whether the hospitality business owner or its manager) shall retain for at least three (3) months after the commencement of operation of the hospitality business under the new hospitality business employer, those employees who were employed for at least two (2) months preceding the date on which the previous hospitality business employer's status as employer terminated.

Id. § 2–18.5(c)(1).

This three-month retention of those previously employed for two months or more is subject to three qualifications. First, such employees ³ need not be retained (or may be discharged during the three-month period) if “the new hospitality business employer determines that fewer employees are required for its full operation,” in which case the employer need only “retain that number of employees needed for its new operations.” Id. § 2–18.5(c)(2). Second, during the three-month period, the employer has “the right to discharge any employee ... for good cause.” Id. § 2–18.5(c)(1). Third, during the three-month period, the new employer is entitled to set the terms and conditions of employment: the employees “shall be employed under the terms and conditions established by the hospitality business buyer or manager or as required by law.” Id. These provisions have an obvious, but somewhat limited, impact on the new employer's ability to choose its own different employees during the three-month period. After the three-month period elapses, the Ordinance does not purport to regulate the new employer's operations.

The Ordinance contains two other provisions of note. First, it contains a “preservation of rights” section, which provides that “[n]o provision of this Ordinance shall be construed to impair, prohibit, or provide for any right of recovery for, that lawful exercise of employees' or employers' right to engage in strike or lockout,” and that “[n]othing in this Ordinance shall impose any obligation, direct or indirect, on any instrumentality of the State of Rhode Island.” Id. § 2–18.5(d). Second, the Ordinance provides an enforcement mechanism. Employees who have not been retained or who have been discharged in violation of the Ordinance may bring suit in state court, subject to a three year statute of limitations, and may receive (1) backpay for each day of the violation, (2) treble damages if the violation is willful, and (3) attorneys' fees. Id. § 2–18.5(e).

II.

The plaintiffs are PRI I, L.P., PRI XVIII, L.P., and the Rhode Island Hospitality Association. PRI I does business as the Hilton Providence and PRI XVIII does business as the Westin Providence. The Westin's workforce is unionized; the Hilton's is not. The Rhode Island Hospitality Association is a trade group of the food service, lodging, restaurant, and tourism industry in Rhode Island, and includes eight hotels within Providence (including the two individual plaintiffs), all of which are hospitality businesses within the meaning of the Ordinance.

Plaintiffs brought suit against the City of Providence requesting a declaratory judgment that the Ordinance was unlawful as well as an injunction preventing enforcement of the Ordinance. In addition to the issues raised both before the district court and on appeal, plaintiffs raised a fifth issue before the district court: that the Ordinance exceeds the City's home rule authority under state law. The fifth issue is not presented on appeal.

The parties submitted a set of stipulated facts and agreed that the case would be decided on the merits. After the parties briefed the issues and a hearing was held, the district court rejected plaintiffs' claims and entered judgment for the defendant. R.I. Hospitality, 775 F.Supp.2d 416. This appeal followed.

III.

Because the parties agreed to have the case decided on the merits on a set of stipulated facts, we review the district court's factual inferences for clear error and any purely legal rulings de novo. See García–Ayala v. Lederle Parenterals, Inc., 212 F.3d 638, 643–45 (1st Cir.2000); United Paperworkers Int'l Union, Local 14 v. Int'l Paper Co., 64 F.3d 28, 31–32 (1st Cir.1995). Here, the parties do not dispute any facts and the only questions presented are legal, so review is de novo.

Plaintiffs advance four theories as to why they are entitled to a pre-enforcement declaratory judgment that the Ordinance is prohibited by federal law.⁴ Their primary argument is that the Ordinance, for several reasons, is pre-empted under the NLRA's Machinists pre-emption doctrine. See Lodge 76, Int'l Ass'n of Machinists v. Wis. Emp. Relations Comm'n, 427 U.S. 132, 96 S.Ct. 2548, 49 L.Ed.2d 396 (1976) (hereinafter Machinists ). Second, they contend that the ordinance is pre-empted under the NLRA's Garmon doctrine. See San Diego Bldg. Trades Council v. Garmon, 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed.2d 775 (1959). Third, they claim that the Ordinance violates the Equal Protection Clause. Finally, they argue that the Ordinance effects a violation of the Contract Clause.

Each of these claims fails and the Ordinance survives pre-enforcement review. Two other courts have considered similar arguments about similar retention ordinances and reached the same conclusion, albeit over dissenting opinions. ⁵ See Wash. Serv. Contractors Coal. v. District of Columbia, 54 F.3d 811 (D.C.Cir.1995) (evaluating D.C. law requiring contractors who take over contracts for the provision of certain services to hire their predecessors' employees for 90 days); Cal. Grocers Ass'n v. City of Los Angeles, 52 Cal.4th 177, 127 Cal.Rptr.3d 726, 254 P.3d 1019 (2011) (evaluating Los Angeles ordinance requiring grocery stores of a certain size to hire their predecessors' employees for 90 days).A. Machinists Pre-emption

While the NLRA does not contain an express pre-emption provision, the Supreme Court has developed two pre-emption doctrines applicable to the Act: Garmon pre-emption and Machinists pre-emption. The first to be developed was the Garmon doctrine, which holds that “States may not regulate activity that the NLRA protects, prohibits, or arguably protects or prohibits.”...