Metropolitan Washington Chapter, Associated Builders and Contractors, Inc. v. DC ( 2023 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 8, 2022 Decided March 14, 2023
No. 22-7014
METROPOLITAN WASHINGTON CHAPTER, ASSOCIATED
BUILDERS AND CONTRACTORS, INC.,
APPELLANT
v.
DISTRICT OF COLUMBIA, A MUNICIPAL CORPORATION AND
MURIEL E. BOWSER, IN HER OFFICIAL CAPACITY AS MAYOR OF
THE DISTRICT OF COLUMBIA,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 1:12-cv-00853)
Paul J. Kiernan argued the cause and filed the briefs for
appellant.
Graham E. Phillips, Deputy Solicitor General, Office of
the Attorney General for the District of Columbia, argued the
cause for appellees. With him on the brief were Karl A. Racine,
Attorney General at the time the brief was filed, Caroline S.
Van Zile, Solicitor General, and Ashwin P. Phatak, Principal
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Deputy Solicitor General. Carl J. Schifferle, Assistant
Attorney General, entered an appearance.
Before: MILLETT and CHILDS, Circuit Judges, and
ROGERS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
ROGERS.
ROGERS, Senior Circuit Judge: Metropolitan Washington
Chapter, Associated Builders and Contractors, Inc. (“Metro
Washington”), a corporate trade organization representing
construction companies, brought this pre-enforcement
challenge to the constitutionality of the District of Columbia
First Source Employment Agreement Act of 1984, D.C. Code
§ 2-219.01 et seq. (as amended). The statute requires
contractors on D.C. government-assisted projects to grant
hiring preferences to D.C. residents. Metro Washington
appeals the district court’s Rule 12 dismissals of the claims
under the dormant Commerce Clause, U.S. Const. Art. I, § 8,
cl. 3, and the Privileges and Immunities Clause, id. Art. IV, §
2, cl. 1, and the grant of summary judgment to the District of
Columbia on the substantive due process claim, id. Amend. V.
For the following reasons, we affirm in part and we dismiss in
part.
I.
As amended in 2011, the statute requires the contractor on
“every . . . project or contract” that receives D.C. government
assistance “valued at $300,000 or more” to grant hiring
preferences to residents of the District and periodically submit
a compliance report to the D.C. Department of Employment
Services. The Workforce Intermediary Establishment and
Reform of First Source Amendment Act of 2011, D.C. Law 19-
84, 58 D.C. Reg. 11,170 (2011) (codified at D.C. Code § 2-
3
219.01 et seq.). The hiring and reporting obligations vary
depending on the value of government assistance and on
whether a “construction project or contract” is involved. See
D.C. Code § 2-219.03(e). For example, if the government
assistance is valued between $300,000 and $5,000,000, then
the contractor must agree “that at least 51% of the new
employees hired to work on the project or contract shall be
District residents.” Id. § 2-219.03(e)(1)(A). The District may
grant a waiver upon the contractor’s demonstrating a “good-
faith effort to comply.” Id. § 2-219.03(e)(2)(B)(i). When the
District determines that a good-faith waiver is not justified, it
may impose monetary penalties calibrated to the value of the
total labor costs of the project. Id. §§ 2-219.03(e)(4)(A), (B).
Repeated violations within a ten-year period can trigger
debarment from consideration for the award of government
projects for up to five years. Id. §§ 2-219.03(e)(4)(C), (D).
In 2012, Metro Washington, along with two construction
companies and four construction workers who were residents
of Maryland or Virginia, sued pursuant to 42 U.S.C. § 1983,
seeking “declaratory and injunctive relief against the Mayor
and the District of Columbia . . . to strike down as
unconstitutional the District’s First Source Employment Act
and to block its enforcement.” Compl. 2. They challenged the
Act’s constitutionality on various grounds, including that it
violated the dormant Commerce Clause, the Fifth Amendment,
and the Privileges and Immunities Clause. Id. ¶¶ 95–101, 102
–07, 116–20, 88–94. The District moved to dismiss the
complaint pursuant to Federal Rule of Civil Procedure
12(b)(6). The district court granted the motion with respect to
all but one of the claims. Metro. Washington Chapter v.
District of Columbia, 57 F. Supp. 3d 1, 32 (D.D.C. 2014). The
court ruled that the complaint failed to state a viable claim
under the dormant Commerce Clause and the Fifth
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Amendment, id. at 26–28, 29, 31, while denying the motion as
to the Privileges and Immunities Clause claim, id. at 26.
After the District moved for judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c), the district
court sua sponte appointed amicus curiae to address the
applicability of the Privileges and Immunities Clause to the
District of Columbia. At a hearing on the District’s Rule 12(c)
motion, the district court ruled that “the Privileges and
Immunities Clause, per se, doe[s not] apply” to the District of
Columbia. But the court allowed the case to proceed in view
of amicus’s argument that the Due Process Clause of the Fifth
Amendment incorporates against the District of Columbia the
individual rights conferred by the Privileges and Immunities
Clause. Upon the filing of an amended complaint reflecting
this “reverse incorporation” theory, Am. Compl. ¶¶ 89–96, and
the voluntary dismissal of one of the two construction
companies, Stipulation of Dismissal of Pl., ECF No. 53, the
parties filed cross motions for summary judgment. The district
court granted summary judgment to the District. Metro.
Washington Chapter v. District of Columbia, 578 F. Supp. 3d
7, 10 (D.D.C. 2021). The court found that the construction
workers lacked Article III standing because they failed to show
injury in fact from operation of the statute, id. at 14–15 (citing
Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)), but that
Metro Washington had associational standing, id. at 15–16
(citing Chamber of Com. v. EPA, 642 F.3d 192, 200 (D.C. Cir.
2011)). On the merits, the court ruled that the Privileges and
Immunities Clause is inapplicable to the District of Columbia
under Duehay v. Acacia Mutual Life Insurance Co., 105 F.2d
768 (D.C. Cir. 1939), and that “there is no basis upon which to
incorporate the Privileges and Immunities Clause into the Fifth
Amendment.” Metro. Washington Chapter, 578 F. Supp. 3d at
18. Metro Washington appeals.
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II.
Metro Washington contends that the statute imposes
residence-based hiring requirements on contractors in violation
of the dormant Commerce Clause, the Privileges and
Immunities Clause, and the due process component of the Fifth
Amendment. In view of the parties’ contentions, we ask
whether Metro Washington has shown both constitutional and
prudential standing with respect to each of its claims. See
Mountain States Legal Found. v. Glickman, 92 F.3d 1228, 1232
(D.C. Cir. 1996).
Organized as a nonstock corporation under Maryland law,
Metro Washington is the “leading commercial[] construction
association” in the Washington, D.C., metropolitan area with
529 member organizations. Am. Compl. ¶ 4. Its membership
comprises “general contractors, specialty contractors,
construction industry . . . associates, and suppliers.” Id. Metro
Washington seeks judicial relief from injury not to itself but to
its members. It may do so in accordance with the constitutional
requirement of a case or controversy when “(a) its members
would otherwise have standing to sue in their own right; (b) the
interests it seeks to protect are germane to the organization’s
purpose; and (c) neither the claim asserted nor the relief
requested requires the participation of individual members in
the lawsuit.” Hunt v. Wash. State Apple Advert. Comm’n, 432
U.S. 333, 343 (1977).
To meet the requirement that it “identify at least one
member with independent standing to sue,” Flyers Rts. Educ.
Fund, Inc. v. U.S. Dep’t of Transp., 957 F.3d 1359, 1362 (D.C.
Cir. 2020), Metro Washington relies inter alia on the alleged
injury suffered by its member Miller & Long, Inc., a corporate
construction company that “regularly bids on work projects”
covered by the statute. Am. Compl. ¶ 5. Miller & Long can
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bring this action in its own right based on its allegations that it
incurs increased administrative costs to comply with the
statute’s hiring and reporting requirements, which constitutes
injury in fact that would be redressed by a favorable decision.
See Ass’n of Am. R.R.s. v. Dep’t of Transp., 38 F.3d 582, 585–
86 (D.C. Cir. 1994); Lutheran Church-Mo. Synod v. FCC, 141
F.3d 344, 349 (D.C. Cir. 1998). See generally Lujan, 504 U.S.
at 560–61. The litigation is germane to Metro Washington’s
purpose of promoting hiring “based on individual merit and
performance” irrespective of a construction worker’s state of
residence, Am. Compl. ¶ 4, and the relief requested by Metro
Washington does not require participation by individual
construction companies, satisfying the requirements for Article
III standing under Hunt, 432 U.S. 333.
To the extent that Metro Washington rests its claim to
relief on the Privileges and Immunities Clause and the Fifth
Amendment, the District of Columbia disputes Metro
Washington’s prudential standing on the ground that the proper
parties to assert those rights are individual nonresident
workers. “[T]he source of the plaintiff’s claim to relief
assumes critical importance with respect to the prudential rules
of standing.” Warth v. Seldin, 422 U.S. 490, 500 (1975); see
also Clarke v. Secs. Indus. Ass'n, 479 U.S. 388, 400 n.16
(1987). “Ordinarily, a party ‘must assert [its] own legal rights’
and ‘cannot rest [its] claim to relief on the legal rights . . . of
third parties.’” Sessions v. Morales-Santana, 137 S. Ct. 1678,
1689 (2017) (quoting Warth, 422 U.S. at 499). “Th[is]
limitation,” the Supreme Court explained, “frees the [c]ourt . .
. from unnecessary pronouncement on constitutional issues”
and “assures the court that the issues before it will be concrete
and sharply presented.” Sec’y of State of Md. v. Joseph H.
Munson Co., 467 U.S. 947, 955 (1984) (quoting United States
v. Raines, 362 U.S. 17, 22 (1960)). It “assumes that the party
with the right has the appropriate incentive to challenge (or not
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challenge) governmental action and to do so with the necessary
zeal and appropriate presentation.” Kowalski v. Tesmer, 543
U.S. 125, 129 (2004). Although the precedents are less than
pellucid about the scope of the “exception” to this rule, the
Court has sometimes allowed a litigant to assert the rights of a
third party when (1) “the party asserting the right has a ‘close’
relationship with the person who possesses the right” and (2)
“there is a ‘hindrance’ to the possessor’s ability to protect [its]
own interests.” Id. at 130 (quoting Powers v. Ohio, 499 U.S.
400, 411 (1991)).
Neither Metro Washington nor any of its identified
members possesses a right protected by the Privileges and
Immunities Clause. First, Metro Washington acknowledges
that both the association and its identified members (on whose
alleged injuries it relies) are corporations. Appellant’s Br. 7
n.21, 12. The Supreme Court has interpreted the Privileges and
Immunities Clause “not to protect corporations,” Tenn. Wine &
Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2460–61
(2019) (citing W. & S. Life Ins. Co. v. State Bd. of Equalization
of Cal., 451 U.S. 648, 656 (1981)), inasmuch as “[a]
corporation is not a mere collection of individuals capable of
claiming all benefits assured them by Section 2, Article IV, of
the Constitution,” Hemphill v. Orloff, 277 U.S. 537, 548
(1928). Second, the statute’s requirements apply equally to
contractors based in the District of Columbia and outside. See
D.C. Code § 2-219.01 et seq. Neither Metro Washington nor
its identified members can therefore claim the protections of
the Privileges and Immunities Clause based on their state of
residency. Because the Privileges and Immunities Clause
confers neither Metro Washington nor its identified members
with a right to challenge the statute, Metro Washington asserts
the rights of individual nonresident workers, who are third
parties not before the court. The nonresident workers who
initially filed the case were dismissed for a lack of injury in
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fact, Metro. Washington Chapter, 578 F. Supp. 3d at 14–15,
and they have not appealed.
Yet Metro Washington does not attempt to show the
requisite “‘close’ relationship” or “hindrance” to surmount the
general bar on vicariously asserting the rights of third parties.
Kowalski, 543 U.S. at 130 (quoting Powers, 499 U.S. at 411).
In its opening brief, Metro Washington appears to disclaim any
argument that this case qualifies under an “exception” to the
rule against third-party standing. Appellant’s Br. 13. In its
reply brief, Metro Washington purports to speak in part “for the
rights of . . . the employees who comprise [its] members,”
Appellant’s Reply Br. 3, but it is construction companies, not
workers, who are Metro Washington’s members, Am. Compl.
¶ 4. Metro Washington does not identify any obstacle that
would hamper a nonresident worker’s “ability to protect his
own interests.” Kowalski, 543 U.S. at 130. Indeed, several
nonresident workers did participate in the district court
proceedings, although they did not appeal. Nor is this an
instance in which “enforcement of the challenged restriction
against the litigant would result indirectly in the violation of
third parties’ rights,” where the Court has “been quite forgiving
with the[] criteria” for asserting third-party standing. Id.(internal quotation marks omitted); see June Med. Servs. LLC
v. Russo, 140 S. Ct. 2103, 2118–19 (2020) (plurality opinion)
(collecting such cases). See generally Curtis A. Bradley &
Ernest A. Young, Unpacking Third-Party Standing, 131 YALE
L.J. 1, 56–57 (2021). There is no suggestion that the statute
would be enforced against Metro Washington.
It is telling that the challengers in all the Privileges and
Immunities Clause cases invalidating “residence-preference”
laws that Metro Washington invokes were individual out-of-
state workers. In New Hampshire v. Piper, 470 U.S. 274(1985), a Vermont resident who wished to practice law in
9
neighboring New Hampshire challenged a New Hampshire law
limiting bar admission to state residents. Likewise, the
plaintiffs in Hicklin v. Orbeck, 437 U.S. 518 (1978), were
individual workers considered non-Alaskan residents for the
purposes of the “Alaska Hire” law at issue. Indeed, in Toomer
v. Witsell, 334 U.S. 385 (1948), it was decisive that individual
shrimp fishermen residing in Georgia were among the
challengers to the discriminatory South Carolina law because
their co-plaintiff, a corporate association of fish dealers, was
found to be without standing, id. at 391. In each of those cases,
the challengers’ standing rested on the privileges-and-
immunities rights of nonresident workers. Accord. Lunding v.
N.Y. Tax Appeals Tribunal, 522 U.S. 287, 293 (1998); Austin
v. New Hampshire, 420 U.S. 656, 657 (1975); Doe v. Bolton,
410 U.S. 179, 184-85, 200 (1973); Blake v. McClung, 172 U.S.
239, 243 (1898).
This is also true of the only case identified by Metro
Washington that involved associational standing. In United
Building & Construction Trades Council v. Mayor & Council
of Camden, 465 U.S. 208 (1984), the Supreme Court clarified
that the Privileges and Immunities Clause binds municipalities
and remanded the case to the New Jersey Supreme Court to
determine whether the challenged city ordinance was
constitutional. Id. at 221. The challenger was an
unincorporated association of labor unions that sought to
invoke the privileges-and-immunities rights of out-of-state
workers who were members of the unions. Br. of Appellant at
*4–5, *5 n.10, Camden, 465 U.S. 208 (1983) (No. 81-2110).
Metro Washington’s membership, by contrast, is limited to
contractors, and it cites no authority exempting from the third-
party standing rule a corporate association that seeks to assert
the privileges-and-immunities “rights of its members’
employees.” Appellant’s Reply Br. 3 (emphasis added).
Anyway, Camden arose from state court, a context in which the
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Court has relaxed its prudential standing limitations. See City
of Chicago v. Morales, 527 U.S. 41, 55 n.22 (1999) (plurality
opinion). Unlike here, “[w]hen a state court has reached the
merits of a constitutional claim, ‘invoking prudential
limitations on the respondent’s assertion of jus tertii would
serve no functional purpose.’” Id. (quoting City of Revere v.
Mass. Gen. Hosp., 463 U.S. 239, 243 (1983) (alteration
omitted)).
Whether the third-party standing rule is best viewed as
constitutional or prudential (and thereby waivable) is
immaterial here because the District has not waived its
challenge to Metro Washington’s standing to assert the
privileges-and-immunities rights of nonresident workers. See
Grocery Mfrs. Ass’n v. EPA, 693 F.3d 169, 179 (D.C. Cir.
2012); id. at 180 (Tatel, J., concurring); see also Lexmark Int’l,
Inc. v. Static Control Components, Inc., 572 U.S. 118, 127 n.3
(2014). Contrary to Metro Washington’s suggestion, the
District raised the third-party standing objection in its motion
to dismiss, Def.’s Mot. to Dismiss 16–17, ECF No. 6, thereby
preserving its argument in view of the possibility that the
individual workers would be dismissed from the action, see id.,and the district court noted the preservation of this issue, Metro.
Washington Chapter, 57 F. Supp. 3d at 20 n.9.
Metro Washington’s substantive due process claim
invokes “the same” privileges-and-immunities right held by
nonresident workers. Appellant’s Br. 28. In support of its
“reverse-incorporation” theory, Metro Washington maintains it
is a “necessity” that the Privileges and Immunities Clause and
the Due Process Clause of the Fifth Amendment provide “a
uniformity of protection.” Id. Indeed, Metro Washington
begins its substantive due process argument by urging this
court to recognize that “the rights protected by the [Privileges
and Immunities] Clause should be protected in the District for
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nonresidents and residents alike,” id. at 26, and to adopt a
uniform standard such that the “same rights are protected . . .
under one standard,” id. at 28. Metro Washington did not
allege in its amended complaint, nor argue in this court, that
corporations may have direct rights under its theory of reverse
incorporation. Consequently, Metro Washington’s prudential
standing theories to bring the Privileges and Immunities Clause
claim and the Due Process Clause claim must stand and fall
together. For the reasons discussed, the Privileges and
Immunities Clause confers neither Metro Washington nor its
identified members with a right to challenge the statute.
Because the protections of the Privileges and Immunities
Clause and the putative Fifth Amendment privileges-and-
immunities right must be coextensive on Metro Washington’s
theory, its members likewise possess no substantive due
process right that is infringed by the statute.
Given that Metro Washington’s Privileges and Immunities
Clause and substantive due process claims run afoul of the
general rule against third-party standing, this court need only
address the merits of its dormant Commerce Clause challenge.
“[T]he cardinal principle of judicial restraint — if it is not
necessary to decide more, it is necessary not to decide more —
counsels us to go no further.” PDK Labs., Inc. v. U.S. Drug
Enf’t Agency, 362 F.3d 786, 799 (D.C. Cir. 2004) (Roberts, J.,
concurring in part and concurring in the judgment).
III.
Turning to the merits, this court reviews de novo the
district court’s dismissal of Metro Washington’s dormant
Commerce Clause claim, see Sissel v. HHS, 760 F.3d 1, 4 (D.C.
Cir. 2014), “apply[ing] to local legislation of the District [of
Columbia] the same interstate commerce analysis as [it] would
to state laws,” Milton S. Kronheim & Co. v. District of
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Columbia, 91 F.3d 193, 198 (D.C. Cir. 1996) (citing Electrolert
Corp. v. Barry, 737 F.2d 110 (D.C. Cir. 1984)). The
Commerce Clause operates as “an implicit restraint on state
authority, even in the absence of a conflicting federal statute.”
United Haulers Ass’n v. Oneida-Herkimer Solid Waste Mgmt.
Auth., 550 U.S. 330, 338 (2007). In this “negative aspect,” the
Commerce Clause “prohibits economic protectionism — that
is, regulatory measures designed to benefit in-state economic
interests by burdening out-of-state competitors.” Fulton Corp.
v. Faulkner, 516 U.S. 325, 330 (1996) (internal quotation
marks omitted). But “when a state or local government enters
the market as a participant it is not subject to the restraints of
the Commerce Clause.” White v. Mass. Council of Constr.
Emps., Inc., 460 U.S. 204, 208 (1983). In upholding an
executive order of the Boston mayor that required at least half
the workers to be Boston residents on all construction projects
funded in whole or in part by city funds, the Court concluded
that Boston was acting as a market participant and was
therefore unconstrained by the dormant Commerce Clause. Id.at 214–15. This “market-participant exception reflects a basic
distinction . . . between States as market participants and States
as market regulators,” grounded in the recognition that “the
Framers’ distrust of economic Balkanization was limited by
their federalism favoring a degree of local autonomy.”
Kentucky v. Davis, 553 U.S. 328, 338–39 (2008) (internal
quotation marks omitted) (citing THE FEDERALIST NOS. 7, 11
(Alexander Hamilton), NOS. 42, 51 (James Madison)).
Metro Washington maintains that the statute violates the
dormant Commerce Clause because its employment
requirements discriminate against non-D.C. residents and
impermissibly burden interstate commerce. Metro Washington
does not challenge the statute as applied to any particular
project on which one of its members is the contractor; nor does
it identify any individualized characteristics of its members that
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would render unconstitutional the statute’s application to them
in particular. See, e.g., Sabri v. United States, 541 U.S. 600,
609 (2004). Rather, Metro Washington attacks the statute as
facially invalid under the dormant Commerce Clause and seeks
to have the statute declared unconstitutional in all possible
applications and its enforcement enjoined as to any person.
Appellant’s Br. 39; Am. Compl. 38.
To prevail in its facial attack, Metro Washington must
show that the statute unjustifiably burdens interstate commerce
“in all of its applications.” Wash. State Grange v. Wash. State
Republican Party, 552 U.S. 442, 449 (2008) (citing United
States v. Salerno, 481 U.S. 739, 745 (1987)); see also Rancho
Viejo, LLC v. Norton, 323 F.3d 1062, 1077–78 (D.C. Cir. 2003)
(applying Salerno to a Commerce Clause challenge). “A facial
challenge to a legislative Act is . . . the most difficult challenge
to mount successfully, since the challenger must establish that
no set of circumstances exists under which the Act would be
valid.” Salerno, 481 U.S. at 745. Metro Washington fails to
carry its burden to show that the statute violates the dormant
Commerce Clause in all of its applications. The statute applies
to “government-assisted project[s] or contract[s],” a term that
covers public projects in which the District expends its funds
to purchase goods or services, D.C. Code § 2-219.01(5), and
the District identifies numerous such public-funded
construction projects. Appellee’s Br. 39–40. There, the
District of Columbia is undoubtedly acting as a “market
participant” under White, 460 U.S. at 208, and the dormant
Commerce Clause is no barrier to imposing worker-residency
requirements in those circumstances. “[A] facial challenge
must fail where,” as here, “the statute has a plainly legitimate
sweep.” Wash. State Grange, 552 U.S. at 449 (internal
quotation marks omitted).
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Metro Washington’s view is that White does not control
because the statute is applicable to projects other than those
directly funded by the D.C. government. True, the statute
“can” theoretically be enforced against the contractors on
projects not involving the direct expenditure of public funds,
Appellant’s Br. 30, such as those to which the government
provides a tax abatement or administers a federal grant, D.C.
Code § 2-219.01(5). But “[t]he fact that the . . . Act might
operate unconstitutionally under some conceivable set of
circumstances is insufficient to render it wholly invalid, since
[the Court] ha[s] not recognized an ‘overbreadth’ doctrine
outside the limited context of the First Amendment.” Salerno,
481 U.S. at 745. Metro Washington has failed to identify
particular projects with D.C. government involvement so
attenuated as to disqualify it as a market participant and, “[i]n
determining whether a law is facially invalid,” the court “must
be careful not to go beyond the statute’s facial requirements
and speculate about ‘hypothetical’ or ‘imaginary’ cases.”
Wash. State Grange, 552 U.S. at 449–50) (citing Raines, 362
U.S. at 22). Metro Washington’s contention invites precisely
that form of forbidden speculation on a “fact-poor record[].”
Sabri, 541 U.S. at 609.
Accordingly, the court as a matter of law affirms the
district court’s Rule 12(b)(6) dismissal of Metro Washington’s
dormant Commerce Clause claim and Rule 12(c) dismissal of
the Privileges and Immunities Clause claim. The court also
affirms the district court’s grant of summary judgment to the
District of Columbia on the inapplicability of the Privileges and
Immunities Clause to a corporation. Further, although Metro
Washington has Article III standing as an association, it lacks
third-party standing to raise its alternative Privileges and
Immunities claim based on incorporation through the Fifth
Amendment, and therefore the court dismisses this alternative
contention.