January 4, 2018
http://www.opn.ca6.uscourts.gov/opinions.pdf/18a0004p-06.pdf
“We hold that the City was acting as a market participant in enacting the Ordinance, and therefore these provisions are not preempted by ERISA. … Cincinnati enacted Ordinance No. 282-2012 … to provide guidelines for selecting the “lowest and best bidder” on certain projects of the “Department of Sewers” …
[It] lists fifteen factors to be considered in selecting the lowest and best bidder, two of which are at issue here. Section 320-3(j) requires the bidder to certify whether:
- it provides, or contributes to, a health care plan for those employees working on the project and shall provide a copy of the health plan upon request…
- it contributes to an employee pension or retirement program, including, but not limited to, a 401K, a defined benefit plan, or similar plan, for its field employees working on the project and shall provide a copy of the plan upon request…
- [it] imposes an apprenticeship standard, requiring each bidder to certify that “[f]or the duration of the project, the bidder will maintain or participate in an apprenticeship program for the primary apprenticeable occupation on the project,” and that that apprenticeship program must have graduated at least one apprentice for each of the past five years. …
- [it] requires the winning contractor to pay $.10 per hour per worker into a preapprenticeship training fund, managed by the City. …
The City and the Union argue that the Ordinance cannot be preempted by ERISA because the City was acting as a market participant, rather than as a regulator, by codifying in the Ordinance its preferences for bidders… [T]he goal of “efficient procurement” does not restrict a state or municipality to selecting the cheapest possible bidder. To the contrary, “just as private entities serve their purposes by taking into account factors other than price in their procurement decision,” so too can a municipality…
In his report submitted in this case, Dr. Dale Belman, a professor at Michigan State University, explained:
“[p]rivate sector owners who undertake construction projects for their own use are concerned with factors beyond the bid price for a project. This reflects a purpose of minimizing the long term costs of a construction project where quality, timeliness, safety and predictability are as important as bid price in determining the capital and operating costs of a construction project. In adopting the ordinance, the [City] acted in a manner similar to other large owners who are building for their own purposes.”
[A] municipality might reasonably conclude that a contractor who provides these benefits is less likely to experience significant employee turnover, improving the stability and overall quality of a project. This is consistent with the City’s stated goal to find contractors who are committed to the City’s “safety, quality, time, and budgetary concerns.” …Moreover, the apprenticeship requirements in §§ 320-5 and 320-7 are connected to the City’s reasonable concern over a possible shortfall of trained workers who would be available for City projects in the future. … The City has a strong proprietary interest in developing a skilled workforce for its many future projects….
The City was acting as a market participant in enacting the Ordinance, and thus, the Ordinance is not subject to ERISA preemption… [W]e REVERSE … and direct the district court to enter judgment in favor of the City of Cincinnati.”