Allied Constr. Indus. v. City of Cincinnati, et al., Nos. 16-4248/4249 (BOGGS, Batchelder, Kathledge).
The plaintiff challenged a Cincinnati ordinance—related to how the city is to select the “lowest and best bidder” on Department of Sewers projects—as preempted by the Employee Retirement Income Security Act of 1974 (“ERISA”). The ordinance provisions (1) require each bidder to certify whether it provides or contributes to a healthcare plan and an employee pension or retirement program for its employees; (2) require each bidder to certify that the bidder will maintain or participate in an apprenticeship program during the project; and (3) require winning contractors to pay $0.10 per hour per worker into a city pre-apprenticeship training fund. The district court held that the ordinances were preempted by ERISA and granted summary judgment to the plaintiff, and the city appealed.
The Sixth Circuit reversed, joining the Ninth Circuit in holding that the market-participant doctrine outlined in Bldg. & Constr. Trades Council of the Metro. Dist. v. Associated Builders & Contractors of Mass./R.I., Inc., 507 U.S. 218 (1993) (“Boston Harbor”) applies to ERISA. Specifically, the Court held that, “Where a state or municipality acts as a proprietor rather than a regulator, it is not subject to ERISA preemption.” The Court reasoned that, just as a private purchaser can seek certain concessions from a contractor, so too can a state or municipality. The Court further adopted the two-step inquiry framework of Cardinal Towing & Auto Repair, Inc. v. City of Bedford, 180 F.3d 686 (5th Cir. 1999), as the test to be applied in assessing whether municipal conduct qualifies as market participation. Applying this framework, the Court found that Cincinnati was acting as a market participant in enacting the ordinance at issue, and therefore that ERISA did not preempt the ordinance provisions.