First Source Decision

8/12/2019 First Source Decision

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UNITED STATES DISTRICT COURTFOR THE DISTRICT OF COLUMBIA

)METROPOLI TAN WASHI NGTON )

CHAPTER, )ASSOCI ATED BUI LDERS AND )CONTRACTORS, I NC. , et al . )

)Pl ai nt i f f s, )

)v . )

) Ci v. Act i on No. 12- 853 ( EGS)DI STRI CT OF COLUMBI A, )

)and )

)VI NCENT C. GRAY, i n hi s )of f i ci al capaci t y as Mayor )of t he Di st r i ct of Col umbi a, )

)Def endant s. )

)

MEMORANDUM OPINION

I n 1984, t he Di st r i ct of Col umbi a ( her ei naf t er Di st r i ct )

enact ed t he Fi r st Sour ce Empl oyment Agr eement Act ( her ei naf t er

Fi r st Sour ce Act or Act ) , a r esi dent i al pr ef er ence st at ut e

f or t he const r uct i on i ndust r y mandat i ng t hat cer t ai n per cent ages

of const r uct i on j obs on pr oj ect s f unded i n whol e or i n par t , or

admi ni st er ed by t he ci t y, be f i l l ed by Di st r i ct r esi dent s. The

Act was amended i n 2011 by t he Wor kf or ce I nt er medi ar y

Est abl i shment and Ref or m of Fi r st Sour ce Amendment Act of 2011,

whi ch was s i gned by Mayor Vi ncent C. Gr ay and passi vel y appr oved

by Congr ess. The Fi r st Sour ce Act , bot h as enact ed and amended,

i s i nt ended t o addr ess t he uni que posi t i on i n whi ch t he Di st r i ct


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f i nds i t sel f as t he onl y j ur i sdi c t i on i n t he count r y t hat i s

l egal l y bar r ed f r om i mposi ng a commut er t ax on non- r esi dent s who

come i nt o t he ci t y t o wor k. Near l y 70 per cent of j obs i n t he

Di st r i ct ar e hel d by non- r esi dent s and t hi s i nabi l i t y t o l evy a

commut er t ax al l egedl y r esul t s i n a si gni f i cant f i nanci al

shor t f al l f or t he Di st r i ct , especi al l y because t he unempl oyment

r at e i n t he Di st r i ct i s much hi gher t han i n sur r oundi ng

j ur i sdi ct i ons. Pl ai nt i f f s, a non- pr of i t commer ci al

or gani zat i on, t wo const r uct i on compani es, and f our i ndi vi dual s

who l i ve i n Mar yl and and Vi r gi ni a chal l enge t he l aw as enact ed

and amended as a vi ol at i on of t hei r const i t ut i onal r i ght s. They

ar gue t hat f or t he pur poses of j udi ci al r evi ew of t he Fi r st

Sour ce Act , t he Di st r i ct must be t r eat ed as i f i t i s a st at e.

They cont end t hat t r eat i ng t he Di st r i ct as a st at e woul d r ender

t he Fi r st Sour ce Act unconst i t ut i onal .

Thi s case t hus r epr esent s somet hi ng of a t wi st i n t he l ong

l i ne of cases i n whi ch t he Di st r i ct has r epeat edl y conf r ont ed

t he uncont r over t ed f act t hat i t s uni que const i t ut i onal st at us

pr event s i t f r om enj oyi ng benef i t s st at es t ake f or gr ant ed. For

i nst ance, i n t hi s nascent cent ur y al one, t he Di st r i ct has been

t ol d ( yet agai n) t hat i t s ci t i zens cannot el ect r epr esent at i ves

wi t h vot i ng r i ght s t o t he Congr ess of t he Uni t ed St at es, Adams

v. Clinton , 90 F. Supp. 2d 35 ( D. D. C. 2000) ; cannot l evy a

commut er t ax, Banner v. United States , 303 F. Supp. 2d 1 ( D. D. C.


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2004) ; and cannot cont r ol expendi t ur es of l ocal l y der i ved f unds,

Council of the District of Columbia v. Gray , No. 14- 655, 2014

U. S. Di st . LEXI S 68055 ( D. D. C. May 19, 2014) . Fur t her , t he

Di s t r i c t i s al so pr ohi bi t ed f r om, inter alia , pr osecut i ng i t s

own cr i mes, D. C. Code 23- 101( c) ; enact i ng l egi sl at i on wi t hout

Congr essi onal appr oval , D. C. Code 1- 204. 04( e) ; 1-

206. 02( c) ( 1) ; r egul at i ng i t s own cour t s or appoi nt i ng i t s own

j udges, D. C. Code 1- 204. 33( a) ; and enact i ng zoni ng

r egul at i ons wi t hout submi ssi on t o t he Nat i onal Capi t al Pl anni ng

Commi ssi on f or r evi ew, D. C. Code 6- 641. 05. These r est r i ct i ons

appl y t o t he Di st r i ct f or t he pr eci se r eason t hat i t i s not a

st at e, but r at her an except i onal const i t ut i onal cr eat i on, over

whi ch Congr ess r et ai ns ul t i mat e l egi sl at i ve aut hor i t y.

Even when t he Di st r i ct f i nal l y gai ned some measur e of

aut onomy wi t h t he passage of t he Home Rul e Act i n 1973, t he

ext ent of home r ul e was l i mi t ed; t he gr ant of l egi sl at i ve

aut hor i t y t o t he Di st r i ct i n t he Home Rul e Act i s cabi ned by t he

power of Congr ess t o det er mi ne what i s i n t he best i nt er est of

t he Di s t r i c t and i t s r es i dent s . I n pr ac t i ce, s i nce t he

enact ment of t he Home Rul e Act , t hi s l i mi t ed abi l i t y t o

l egi sl at e has of t en meant t hat t he pr er ogat i ves of t he

Di st r i ct s l ocal l y el ect ed r epr esent at i ves ar e subor di nat e t o

t hose of Congr ess . Thi s year al one, Congr ess has bl ocked t he

Di st r i ct s abi l i t y t o decr i mi nal i ze mar i j uana possessi on, spend


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i t s own money on abor t i ons f or poor r esi dent s, and has cut f unds

f or D. C. pol i ce of f i cer s t o dr i ve t hei r pol i ce crui ser s t o and

f r om t hei r homes i f t hey l i ve out si de t he Di st r i ct by addi ng

r i der s t o t he Congr essi onal appr opr i at i ons bi l l . 1 These act i ons

by Congr ess ar e wi del y under st ood as f ur t her set backs f or home

r ul e i n t he Di s t r i ct .

The Cour t i s awar e t hat si mi l ar st at e st at ut es, when

chal l enged under t he Pr i vi l eges and I mmuni t i es Cl ause of t he

Const i t ut i on, have al l been st r uck down as unconst i t ut i onal .

However , t he Di st r i ct , unl i ke ever y ot her j ur i sdi ct i on i n t he

count r y t hat i mposes an i ncome t ax on i t s own r esi dent s, i s

bar r ed by t he Home Rul e Act f r om l evyi ng a commut er t ax on

i ncome ear ned by non- r esi dent s wor ki ng her e. Whi l e t hat f act

al one woul d r esul t i n a st r uct ur al i mbal ance i n any ci t y, t he

magni t ude of t he pr obl em i s unique i n t he Di st r i ct , wher e

appr oxi mat el y 70 per cent of j obs ar e hel d by non- r esi dent s.

Thi s st r uct ur al i mbal ance i s exacer bat ed by t he f act t hat t he

unempl oyment r at e i n t he Di st r i ct i s ext r emel y hi gh hi gher

t han bot h t he nat i onal aver age and t hat of t he ent i r e Washi ngt on

met r opol i t an ar ea t hus r equi r i ng t he ci t y t o spend an

1 See Aar on C. Davi s, House Republicans block funding for D.C.marijuana decriminalization , WASHI NGTON POST, J une 25, 2014,ht t p: / / www. washi ngt onpost . com/ l ocal / dc- pol i t i cs/ house-r epubl i cans- bl ock- f undi ng- f or - dc- mar i j uana-decr i mi nal i zat i on/ 2014/ 06/ 25/ d6854ba8- f c6e- 11e3- 8176-f 2c941cf 35f 1_st or y. ht ml ( l ast accessed J ul y 11, 2014) .
http://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.htmlhttp://www.washingtonpost.com/local/dc-politics/house-republicans-block-funding-for-dc-marijuana-decriminalization/2014/06/25/d6854ba8-fc6e-11e3-8176-f2c941cf35f1_story.html


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Amended Act ) , whi ch became ef f ect i ve i n 2012. The l aw, as

enact ed and amended, was t o count er act t he ef f ect s of t he

Di st r i ct s Congr essi onal l y- i mposed ban on t axi ng any of t he

i ncome t hat l eaves t he ci t y, whi ch r esul t s i n $1 bi l l i on t o $2

bi l l i on a year i n l ost r evenue. Counci l of t he Di st . of

Col umbi a, Comm. on Hous. and Wor kf or ce Dev. , Wor kf or ce

I nt er medi ar y Est abl i shment and Ref or m of Fi r st Sour ce Amendment

Act of 2011, B19- 50, Oct . 14, 2011, at 3, available at

ht t p: / / dccl i ms1. dccounci l . us/ i mages/ 00001/ 20120130131015. pdf

( l ast accessed J ul . 4, 2014) ( her ei naf t er Commi t t ee Repor t ) .

The Act i s admi ni st er ed by t he Di st r i ct of Col umbi a Depar t ment

of Empl oyment Ser vi ces ( DOES) . Pl ai nt i f f s chal l enge f our

el ement s of t he Fi r st Sour ce Act as enact ed and amended: ( 1)

empl oyment agr eement s; ( 2) const r uct i on cont r act s; ( 3) t ar get ed-

hi r i ng cont r act s; and ( 4) r epor t i ng r equi r ement s. Compl . 9.

A. The First Source Employment Agreement Act of 1984

The Fi r st Sour ce Act r equi r es t hat al l benef i ci ar i es of a

gover nment - assi st ed pr oj ect or cont r act ent er i nt o an

Empl oyment Agr eement wi t h t he Di st r i ct t hat pr ovi des t hat t he

benef i c i ar y wi l l f i r s t at t empt t o f i l l j obs and vacanci es f r om

t he Fi r st Sour ce Regi st er , on whi ch onl y Di st r i ct r esi dent s can

be l i st ed. Compl . 10- 12; see D. C. Code 2- 219. 03( a) ( 1) . 2

2 For t he pur poses of t hi s sec t i on, al l c i t at i ons t o t he Fi r s tSour ce Act ar e t o t he ver si on of t he Act i n ef f ect pr i or t o


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secur i t y number , j ob t i t l e, hi r e dat e, r esi dence, and r ef er r al

sour ce i nf or mat i on f or al l new hi r es. D. C. Code 2- 219. 03( d) .

Upon submi ss i on of a f i nal r equest f or payment f r om t he

Di st r i ct , at t he concl usi on of a pr oj ect , t he benef i ci ar y must

document compl i ance wi t h t he Act or submi t a r equest f or a

wai ver , whi ch i ncl udes mat er i al demonst r at i ng good f ai t h ef f or t s

t o compl y, r ef er r al s, and j ob adver t i sement s l i st ed wi t h DOES

and ot her s. Id. 2- 219. 03( e) ( 2) . Fai l ur e t o submi t t he

r equi r ed dat a coul d r esul t i n t he i mposi t i on of penal t i es,

i ncl udi ng monet ar y f i nes of 5% of t he t ot al amount of t he

di r ect and i ndi r ect l abor cost s of t he cont r act . Id. 2-

219. 03( e) ( 4) .

B. The Workforce Intermediary Establishment and Reform ofFirst Source Amendment Act of 2011

The Counci l of t he Di st r i ct of Col umbi a passed t he

Wor kf or ce I nt er medi ar y Est abl i shment and Ref or m of Fi r st Sour ce

Amendment Act of 2011 and i t was enact ed by Mayor Gr ay on

December 21, 2011. The Amended Act was t r ansmi t t ed t o Congr ess

f or r evi ew, and af t er t he expi r at i on of t he r equi si t e 30- day

passi ve r evi ew per i od wi t h no j oi nt r esol ut i on of di sappr oval by

Congr ess , i t became ef f ect i ve on Febr uar y 24, 2012. Def endant s

Mot i on t o Di smi ss ( her ei naf t er Def s. MTD) at 5- 6. The

Amended Act br oadens t he def i ni t i on of benef i ci ar y and

gover nment - assi st ed pr oj ect . Li ke t he pr evi ous ver si on of t he


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Act , a benef i ci ar y i s def i ned as a si gnat or y t o a cont r act

execut ed by t he Mayor t hat i nvol ves D. C. f unds or f unds

admi ni st er ed by t he Di st r i ct . D. C. Code 2- 219. 01( 1) ( A) . 3 For

a pr oj ect val ued i n excess of $300, 000, a benef i ci ar y i s

[ a] r eci pi ent of Di st r i ct gover nment economi cdevel opment act i on i ncl udi ng cont r act s, gr ant s, l oans,t ax abat ement s, l and t r ansf er s f or r edevel opment , ort ax i ncr ement f i nanci ng t hat r esul t s i n a f i nanci albenef i t of $300, 000 or mor e f r om an agency, commi ss i oni ns t r ument al i t y, or ot her ent i t y of t he Di s t r i c tgover nment , i ncl udi ng a f i nanci al or banki ngi nst i t ut i on whi ch ser ves as t he r eposi t or y f or $1mi l l i on or mor e of Di st r i ct of Col umbi a f unds.

Id. 2- 219. 01( 1) ( B) . A gover nment - assi st ed pr oj ect or

cont r act i ncl udes

any const r uct i on or non- const r uct i on pr oj ect orcont r act r ecei vi ng f unds or r esour ces f r om t heDi st r i ct of Col umbi a, or f unds or r esour ces whi ch, i naccor dance wi t h a f eder al gr ant or ot her wi se, t heDi st r i ct of Col umbi a gover nment admi ni st er s, i ncl udi ngcont r act s, gr ant s, l oans, t ax abat ement s orexempt i ons, l and t r ansf er s, l and di sposi t i on anddevel opment agr eement s, t ax i ncr ement f i nanci ng, orany combi nat i on t her eof , t hat i s val ued at $300, 000 ormor e.

Id. 2- 219. 01( 5) .

The Amended Act al so expands t he appl i cabi l i t y of t he

Empl oyment Agr eement s t hat each benef i ci ar y must ent er i nt o wi t h

t he Di st r i ct . Under t he Amended Act , Empl oyment Agr eement s must

i ncl ude a pr ovi si on t hat t he f i r st sour ce f or f i ndi ng empl oyees

3 For t he pur poses of t hi s Sect i on, al l ci t at i ons ar e t o t heWor kf or ce I nt er medi ar y Est abl i shment and Ref or m of t he Fi r stSour ce Amendment Act of 2011, not t he or i gi nal ver si on of t heAct passed i n 1984.


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t o f i l l al l j obs cr eat ed by t he pr oj ect or cont r act ( or any

vacancy occur r i ng dur i ng t he j ob) wi l l be t he Fi r st Sour ce

Regi s t er . Id. 2- 219. 03( a) ( 1) - ( a) ( 2) . The Empl oyment

Agr eement must al so i ncl ude a pr ovi si on t hat 51 per cent of

empl oyees hi r ed wi l l be Di st r i ct r esi dent s unl ess t he Mayor

wai ves t he r equi r ement . A wai ver i s avai l abl e i f ( 1) DOES has

cer t i f i ed t hat t he benef i ci ar y made a good f ai t h ef f or t t o

compl y; ( 2) t he benef i ci ar y i s l ocat ed out si de t he ar ea; none of

t he wor k i s per f or med i n t he ar ea; t he benef i ci ar y publ i shed

each avai l abl e j ob i n a ci t y- wi de newspaper f or 7 cal endar days

and DOES cer t i f i es t hat t her e ar e not enough appl i cant s f r om t he

Fi r st Sour ce Regi st er f or t he j ob, or t he el i gi bl e appl i cant s

ar e not avai l abl e f or par t - t i me wor k or do not have t he means t o

t r avel t o t he j ob si t e; or ( 3) t he benef i ci ar y ent er s i nt o

wor kf or ce devel opment t r ai ni ng or pl acement ar r angement wi t h

DOES. Id. 2- 219. 03( e) ( 3) ( A) ( i ) - ( A) ( i i i ) .

DOES wi l l consi der a number of f act or s i n deci di ng whet her

a benef i ci ar y has made a good f ai t h ef f or t t o compl y suf f i ci ent

t o j us t i f y a wai ver , i nc l udi ng:

( i ) Whet her [ DOES] has cer t i f i ed t hat t her e i s an

i nsuf f i ci ent number of Di st r i ct r esi dent s i n t he l abormar ket who possess t he ski l l s r equi r ed t o f i l l t heposi t i ons t hat wer e cr eat ed as a r esul t of t he pr oj ector cont r act ;

( i i ) Whet her t he benef i ci ar y post ed t he j obs on t he[ DOES] j ob websi t e f or a mi ni mum of 10 cal endar days;


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meet t he l ocal hi r i ng r equi r ement s as wel l as ot her i nf or mat i on

about heal t h and r et i r ement pl ans, ongoi ng ef f or t s t o hi r e

Di st r i ct r esi dent s, and past compl i ance wi t h t he Act . Id. 2-

219. 03( e) ( 1A) ( F) ( i ) . The wi nni ng bi dder must al so submi t a

r evi sed empl oyment pl an f or appr oval pr i or t o t he commencement

of wor k. Id. 2- 219. 03( e) ( 1A) ( F) ( i i ) .

The Amended Act cal l s f or t he i mposi t i on of har sher

penal t i es f or noncompl i ance. I n addi t i on t o a penal t y equal t o

5 per cent of t he di r ect or i ndi r ect l abor cost s f or t he pr oj ect

or cont r act f or wi l l f ul br each of t he empl oyment agr eement , id.

2- 219. 03( e) ( 4) ( A) , f ai l ur e t o meet r epor t i ng r equi r ement s or

obt ai n a good f ai t h wai ver coul d r esul t i n i mposi t i on of a

penal t y equal t o 1/ 8 of 1 per cent of t he di r ect or i ndi r ect

l abor cost s f or t he pr oj ect or cont r act f or each per cent age t hat

t he benef i ci ar y i s def i ci ent i n meet i ng t he hi r i ng r equi r ement s,

id. 2- 219. 03( e) ( 4) ( B) . Fur t her , t wo vi ol at i ons can r esul t i n

debar ment f r om t he awar d of Di st r i ct pr oj ect s or cont r act s f or a

per i od not t o exceed f i ve year s. Id. 2- 219. 03( e) ( 4) ( D) .

C. Effect on Plaintiffs

Pl ai nt i f f s al l ege t hat t he addi t i onal r equi r ement s i mposed

by t he Amended Act have cr eat ed a si t uat i on i n whi ch

cont r act or s cannot possi bl y compl y wi t h t he Act s hi r i ng and

quot a r equi r ement s, and t hey ar e t hr eat ened wi t h j ob l osses,

busi ness f ai l ur es, and debar ment f r om gover nment cont r act i ng.


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Compl . at 3. Whi l e t he ai m of t he Fi r st Sour ce Act i s t o

pr omot e empl oyment i n t he Di st r i ct , Pl ai nt i f f s cont end t hat i t

uses unl awf ul and unconst i t ut i onal means t o t r y t o shi f t t o a

pr ef er r ed gr oup of peopl e Di st r i ct r esi dent s f i r st di bs on

j obs al r eady cr eat ed. Id. 81. They al l ege t hat t he r eal

i ssue wi t h empl oyment i n t he Di st r i ct i s not a shor t age of j obs,

but r at her a shor t age of qual i f i ed appl i cant s. See id.

Member s of Pl ai nt i f f ABC- Met r o Washi ngt on ( her ei naf t er

Met r o Washi ngt on) , i ncl udi ng t he t wo Cor por at e Pl ai nt i f f s,

have been or wi l l be benef i ci ar i es as def i ned by t he Act and,

as such, have al l egedl y been or wi l l be f or ced t o devi at e f r om

t hei r i ndi vi dual - mer i t , l evel - pl ayi ng- f i el d bus i ness phi l osophy

because t hey must assess pr ospect i ve empl oyees based on wher e

t hey l i ve r at her t han t hei r abi l i t y t o do t he wor k. Compl .

15, 20, 41, 68, 69. Accor di ng t o Met r o Washi ngt on, i t s member s

t ypi cal l y hi r e a per manent wor kf or ce, as opposed t o a pr oj ect -

based one. Id. 15. As a r esul t , compl yi ng wi t h t he Act

essent i al l y requi r es i t s member s t o ei t her wi t hhol d wor k f r om

non- Di st r i ct r esi dent s or decl i ne t o bi d on cer t ai n pr oj ect s

because of a shor t age of qual i f i ed Di st r i ct r esi dent s. Id.

Met r o Washi ngt on s member s al so pur por t edl y i ncur i ncr eased

r ecrui t i ng, t r ai ni ng, hi r i ng, and super vi s i on cos t s as a r esul t

of compl i ance wi t h t he Act . Compl . 16, 17, 42, 52, 58.


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Met r o Washi ngt on al l eges t hat but f or t he Act , i t s member s woul d

have not have i ncur r ed t hese cost s.

The Act has al l egedl y r esul t ed i n a host of ot her pr obl ems

f or Met r o Washi ngt on s member shi p, i ncl udi ng l ess pr oduct i vi t y,

hi gher over al l l abor cost s, decr ease i n mor al e among non-

Di st r i ct empl oyees, hi gher l egal f ees, debar ment f or vi ol at i ons,

f ewer pr oj ect s, l ayof f s, and hi gher cost s associ at ed wi t h

pr epar i ng bi ds f or pr oj ect s. Compl . 16, 17, 64, 71, 75, 76,

79. Met r o Washi ngt on al l eges t hat t he Amended Act wi l l al so

make i t mor e di f f i cul t f or i t s member s t o bi d on pr oj ect s t hat

r ecei ve mor e t han $5 mi l l i on i n gover nment ass i st ance. Id.

70. Mor eover , Met r o Washi ngt on and t he Cor por at e Pl ai nt i f f s

cl ai m t hey wi l l i ncur addi t i onal cost s i n t r ai ni ng empl oyees on

t he requi r ement s of t he Act , engagi ng wi t h t he Di st r i ct

gover nment and l eader shi p, and publ i c r el at i ons. The Cor por at e

Pl ai nt i f f s f ur t her al l ege t hat t hey ar e di scri mi nat ed agai nst

because t hey ar e unabl e t o ass i gn t r ai ned empl oyees t o pr oj ect s

i f t hey cannot sat i sf y t he 51 per cent Di st r i ct hi r i ng

r equi r ement . Id. 23, 43, 53, 59.

Met r o Washi ngt on ar gues t hat i n addi t i on t o t he har m t o i t s

member s, i t s own member shi p wi l l decr ease as i t s member s wi l l be

f or ced t o r educe t he amount of busi ness t hey conduct because of

t he i ncr eased cost of compl yi ng wi t h t he Amended Act . Id. 75.

Fur t her mor e, Met r o Washi ngt on al l eges t hat i t s member s t hat


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cannot af f or d t o compl y wi t h t he Act wi l l al l egedl y be f or ced t o

cl ose, t hus f ur t her r educi ng member shi p. Id. 76. Accor di ng

t o Met r o Washi ngt on, i t s member s ar e al l egedl y at a si gni f i cant

di sadvant age as compar ed t o cont r act or s who choose not t o compl y

wi t h t he Act ; ar e not bot her ed by compl i ance; ar e abl e t o secur e

a wai ver ; or al r eady of f er r et i r ement benef i t s, heal t h pl ans,

and t r ai ni ng. Id. 44, 54, 72. Pl ai nt i f f s c l ai m t hat no

gener al cont r act or has been abl e t o meet , on a r egul ar basi s,

t he 51 per cent r equi r ement f or new hi r es. Id. 22. Accor di ng

t o Pl ai nt i f f s , t hi s i s the r esul t of a number of f ac tor s ,

i ncl udi ng: ( 1) an i nsuf f i ci ent number of ski l l ed wor ker s who

ar e Di st r i ct r esi dent s; ( 2) DOES s f ai l ur e t o vet and scr een

candi dat es and pr ovi de candi dat es wi t h appr opr i at e ski l l s f or a

par t i cul ar j ob; ( 3) Di s t r i ct r es i dent s l ack of t r anspor t at i on,

whi ch makes i t di f f i cul t f or t hem t o r epor t t o j ob- si t es on

t i me; ( 4) t he di spr opor t i onat el y hi gh number of Di st r i ct

r esi dent s who f ai l r equi r ed dr ug t est s; and ( 5) t he

di spr opor t i onat e number of Di st r i ct r esi dent s who qui t wi t hi n

t he f i r st f ew weeks or ar e l et go because of poor at t endance or

per f or mance. Compl . 22. I f t he Act i s uphel d, Met r o

Washi ngt on and t he Cor por at e Pl ai nt i f f s cont end t hat t hey wi l l

be f or ced t o bi d on f ewer pr oj ect s i n t he Di st r i ct , and wi l l

al so have t o i ncr ease t hei r pr i ces i n or der t o cover t he cost of

compl i ance wi t h t he Act . Id. 85.


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The I ndi vi dual Pl ai nt i f f s cannot be l i st ed on t he Fi r st

Sour ce Regi st er because t hey ar e not Di st r i ct r esi dent s, whi ch

t hey al l ege pl aces t hem at a si gni f i cant di sadvant age when

compet i ng f or j obs t hat ar e subj ect t o an Empl oyment Agr eement

as def i ned by t he Act . Id. 14, 43, 53, 59. They al l ege t hat

t hi s r esul t s i n di scr i mi nat i on and excl udes t hem f r om

consi der at i on as par t of a t eam of l abor er s on si gni f i cant

Di st r i ct j obs not because of t hei r ski l l s but si mpl y because

t hey do not l i ve i n t he Di s t r i c t . Id. 83.

II. Standard of Review

A. Rule 12(b)(1)

A f eder al di st r i ct cour t may onl y hear a cl ai m over whi ch

i s has subj ect mat t er j ur i sdi ct i on; t her ef or e, a Rul e 12( b) ( 1)

mot i on f or di smi ssal i s a t hr eshol d chal l enge t o a cour t s

j ur i sdi ct i on. On a mot i on t o di smi ss f or l ack of subj ect mat t er

j ur i sdi ct i on, t he pl ai nt i f f bear s t he bur den of est abl i shi ng

t hat t he Cour t has j ur i sdi ct i on. Lujan v. Defenders of Wildlife ,

504 U. S. 555, 561 ( 1992) . I n eval uat i ng t he mot i on, t he Cour t

must accept al l of t he f act ual al l egat i ons i n t he compl ai nt as

t r ue and gi ve t he pl ai nt i f f t he benef i t of al l i nf er ences t hat

can be dr awn f r om t he f act s al l eged. See Thomas v. Principi ,

394 F. 3d 970, 972 ( D. C. Ci r . 2005) . However , t he Cour t i s not

r equi r ed . . . t o accept i nf er ences unsuppor t ed by t he f act s

al l eged or l egal concl usi ons t hat ar e cast as f act ual


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al l egat i ons . Cartwright Intl Van Lines, Inc. v. Doan , 525 F.

Supp. 2d 187, 193 ( D. D. C. 2007) ( i nt er nal quot at i on mar ks and

ci t at i ons omi t t ed) .

B. Rule 12(b)(6)

A mot i on t o di smi ss pur suant t o Rul e 12( b) ( 6) t est s t he

l egal suf f i ci ency of t he compl ai nt . Browning v. Clinton , 292

F. 3d 235, 242 ( D. C. Ci r . 2002) . I n or der t o be vi abl e, a

compl ai nt must cont ai n a shor t and pl ai n st at ement of t he cl ai m

showi ng t hat t he pl eader i s ent i t l ed t o r el i ef , i n or der t o gi ve

t he def endant f ai r not i ce of what t he . . . cl ai m i s and t he

gr ounds upon whi ch i t r est s. Bell Atl. Corp. v. Twombly , 550

U. S. 544, 555 ( 2007) ( i nt er nal quot at i on mar ks and ci t at i ons

omi t t ed) . The pl ai nt i f f need not pl ead al l of t he el ement s of a

pr i ma f aci e case i n a compl ai nt , Swierkiewicz v. Sorema N.A. ,

534 U. S. 506, 511- 14 ( 2002) , nor must t he pl ai nt i f f pl ead f act s

or l aw t hat mat ch ever y el ement of a l egal t heor y. Krieger v.

Fadely , 211 F. 3d 134, 136 ( D. C. Ci r . 2000) ( ci t at i on omi t t ed) .

However , despi t e t hese l i ber al pl eadi ng st andar ds, t o

sur vi ve a mot i on t o di smi ss , a compl ai nt must cont ai n

suf f i ci ent f act ual mat t er , accept ed as t r ue, t o st at e a cl ai m

f or r el i ef t hat i s pl aus i bl e on i t s f ace. Ashcroft v. Iqbal ,

556 U. S. 662, 678 ( 2009) ( i nt er nal quot at i on mar ks and ci t at i on

omi t t ed) ; Twombly , 550 U. S. at 570. A cl ai m i s f aci al l y

pl ausi bl e when t he f act s pl ead i n t he compl ai nt al l ow t he cour t


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t o dr aw t he r easonabl e i nf er ence t hat t he def endant i s l i abl e

f or t he mi sconduct al l eged. Iqbal , 556 U. S. at 678 ( ci t i ng

Twombly , 550 U. S. at 556) . Whi l e t hi s st andar d does not amount

t o a pr obabi l i t y r equi r ement , i t does r equi r e mor e t han a

sheer possi bi l i t y t hat a def endant has act ed unl awf ul l y. Id.

( c i t i ng Twombly , 550 U. S. at 556) .

[ W] hen r ul i ng on a def endant s mot i on t o di smi ss [ pur suant

t o Rul e 12( b) ( 6) ] , a j udge must accept as t r ue al l of t he

f act ual al l egat i ons cont ai ned i n t he compl ai nt . Atherton v.

D.C. Office of the Mayor , 567 F. 3d 672, 681 ( D. C. Ci r . 2009)

( quot i ng Erickson v. Pardus , 551 U. S. 89, 93 ( 2007) ) . The cour t

must al so gi ve t he pl ai nt i f f t he benef i t of al l i nf er ences t hat

can be der i ved f r om t he f act s al l eged. Kowal v. MCI Commcns

Corp. , 16 F. 3d 1271, 1276 ( D. C. Ci r . 1994) . Despi t e t hi s, a

cour t need not accept i nf er ences dr awn by pl ai nt i f f s i f such

i nf er ences ar e unsuppor t ed by t he f act s set out i n t he

compl ai nt . Id. Fur t her , [ t ] hr eadbar e r eci t al s of t he

el ement s of a cause of act i on, suppor t ed by mer e concl usor y

st at ement s ar e not suf f i ci ent t o st at e a cl ai m. Iqbal , 556

U. S. at 678.

I n det er mi ni ng whet her a compl ai nt st at es a cl ai m, t he

cour t may consi der t he f act s al l eged i n t he compl ai nt , document s

at t ached t her et o or i ncor por at ed t her ei n, and mat t er s of whi ch

i t may t ake j udi ci al not i ce. Abhe & Svoboda, Inc. v. Chao , 508


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F. 3d 1052, 1059 ( D. C. Ci r . 2007) ( i nt er nal quot at i on mar ks and

ci t at i ons omi t t ed) . Among t he document s subj ect t o j udi ci al

not i ce on a mot i on t o di smi ss ar e publ i c r ecor ds. Kaempe v.

Myers , 367 F. 3d 958, 965 ( D. C. Ci r . 2004) .

III. Analysis

A. Standing

Ar t i c l e I I I r es t r i c ts t he power of f eder al cour t s t o t he

adj udi cat i on of act ual cases and cont r over si es. U. S. Const .

ar t . I I I , 2; see also Allen v. Wright , 468 U. S. 737, 750

( 1984) . Thi s requi r ement has gi ven r i se t o sever al doct r i nes .

. . f ounded i n concer n about t he pr oper and pr oper l y l i mi t ed

r ol e of t he cour t s i n a democr at i c soci et y. Id. ( quot i ng

Warth v. Seldin , 422 U. S. 490, 498 ( 1975) ) . I n or der t o

est abl i sh t he exi st ence of a case or cont r over sy wi t hi n t he

meani ng of Ar t i cl e I I I , [ a] par t y must meet cer t ai n

const i t ut i onal mi ni ma, i ncl udi ng a r equi r ement t hat . . . [ t he

par t y] has st andi ng t o br i ng t he act i on. Gettman v. DEA , 290

F. 3d 430, 433 ( D. C. Ci r . 2002) . I ndeed, st andi ng i s an

essent i al and unchangi ng par t of t he case- or - cont r over sy

r equi r ement of Ar t i cl e I I I , Lujan , 504 U. S. at 560, and i s an

essent i al i nqui r y i nt o whet her t he pl ai nt i f f i s ent i t l ed t o have

t he Cour t deci de t he mer i t s of t he di sput e, Allen , 468 U. S. at

750- 51 ( ci t i ng Warth , 422 U. S at 498) .


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To est abl i sh t he i r r educi bl e const i t ut i onal mi ni mum of

st andi ng, a pl ai nt i f f must demonst r at e t hr ee t hi ngs: ( 1)

i nj ur y i n f act , whi ch i s ( a) concr et e and par t i cul ar i zed and

( b) act ual or i mmi nent ; ( 2) t hat t her e i s a causal connect i on

bet ween t he compl ai ned of conduct and t he i nj ur y al l eged t hat i s

f ai r l y t r aceabl e t o t he def endant ; and ( 3) t hat i t i s l i kel y,

and not mer el y specul at i ve, t hat a f avor abl e deci si on wi l l ser ve

t o r edr ess t he i nj ur y al l eged. See Lujan , 504 U. S. at 560- 61

( i nt er nal quot at i on mar ks and ci t at i ons omi t t ed) . Wher e, as

her e, a pl ai nt i f f seeks pr ospect i ve decl ar at or y or i nj unct i ve

r el i ef , al l egat i ons of pas t har m al one ar e i nsuf f i ci ent . See,

e.g. , Dearth v. Holder , 641 F. 3d 499, 501 ( D. C. Ci r . 2011) .

Rat her , a pl ai nt i f f seeki ng decl ar at i ve or i nj unct i ve r el i ef

must show he i s suf f er i ng an ongoi ng i nj ur y or f aces an

i mmedi at e t hr eat of [ f ut ur e] i nj ur y. Id.

Pl ai nt i f f s ar e a t r ade or gani zat i on, t wo cor por at i ons t hat

pr ovi de cont r act i ng ser vi ces, and f our i ndi vi dual s who wor k i n

t he const r uct i on i ndust r y. Pl ai nt i f f Met r o Washi ngt on mai nt ai ns

t hat i t has bot h associ at i onal and or gani zat i onal st andi ng. See

Pl ai nt i f f s Opposi t i on t o Mot i on t o Di smi ss ( her ei naf t er Pl s .

Opp n) at 13. The Di st r i ct cont ends t hat t he I ndi vi dual and

Cor por at e Pl ai nt i f f s have f ai l ed t o al l ege an i nj ur y i n f act

suf f i c i ent t o be t he bas i s f or Ar t i c l e I I I s t andi ng. Def s . MTD

at 17- 18. Mor eover , t he Di st r i ct ar gues t hat Met r o Washi ngt on


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has f ai l ed t o est abl i sh bot h associ at i onal and or gani zat i onal

st andi ng because t he t wo Cor por at e Pl ai nt i f f s have not

est abl i shed st andi ng, and because Met r o Washi ngt on has f ai l ed

t o al l ege any di r ect conf l i ct bet ween i t s mi ssi on and t he

Fi r st Sour ce Act . Def s. MTD at 18; Def endant s Repl y i n

Suppor t of Mot i on t o Di smi ss ( her ei naf t er Def s. Repl y) at 4.

1. I ndi vi dual Pl ai nt i f f s

The f our I ndi vi dual Pl ai nt i f f s r esi de out si de of t he

Di st r i ct of Col umbi a but al l egedl y wor k on pr oj ect s wi t hi n t he

Di st r i ct . They cl ai m t hat t he Act has adver sel y af f ect ed t hei r

abi l i t y t o bi d f or or secur e wor k on Di st r i ct pr oj ect s i n t he

past and wi l l l i kel y cont i nue t o do so, and make mat t er s wor se

under t he Amended Act . Pl s. Opp n at 8 ( emphasi s i n

or i gi nal ) . They al so ar gue t hat t hey do not st and on an equal

f oot i ng wi t h ot her wor ker s because t hey cannot r egi st er on t he

Fi r st Sour ce Regi st er . Id. at 9. Thus, t hey ar e not par t of

t he hi r i ng pool cr eat ed by t he Act and ar e at a si gni f i cant

di sadvant age i n compet i ng f or j obs on pr oj ect s t hat ar e subj ect

t o t he Act s r equi r ement s. Id. at 9; see also Compl . 83 ( For

. . . t he i ndi vi dual Pl ai nt i f f s , t he i mpac t of t he Act i s t o

excl ude t hem f r om consi der at i on as par t of a t eam of l abor er s on

s i gni f i cant Di s t r i c t j obs not because of t hei r ski l l s or des i r es

but si mpl y because t hey do not l i ve i n t he Di st r i ct . ) . These


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i nj ur i es , accor di ng t o t he I ndi vi dual Pl ai nt i f f s , ar e ongoi ng

and i mmi nent . Pl s. Opp n at 9.

The Di st r i ct ar gues t hat t hi s har m, such as i t i s, i s not

t he t ype of par t i cul ar i zed i nj ur y r equi r ed t o suppor t st andi ng.

Accor di ng t o Def endant s, t he i nj ur i es t hat t he I ndi vi dual

Pl ai nt i f f s al l ege ar e ent i r el y der i vat i ve of al l eged i nj ur i es

t o t hei r unnamed empl oyer ( s) . Def s. MTD at 17. The Di st r i ct

al so ar gues t hat t he I ndi vi dual Pl ai nt i f f s c l ai ms ar e f at al l y

at t enuat ed because t he Compl ai nt does not speci f y who t hey

wor ked f or , when t hey wor ked, or wher e t hey wor ked. Id. at 18.

The Di st r i ct does not di sput e t hat i f t he I ndi vi dual Pl ai nt i f f s

have al l eged an i nj ur y i n f act , t hey woul d sat i sf y t he r emai ni ng

st andi ng r equi r ement s.

The maj or i t y of t he r equi r ement s of t he Fi r st Sour ce Act as

enact ed and amended do not di r ect l y appl y t o t he I ndi vi dual

Pl ai nt i f f s. Rat her , t he Act ar guabl y i mpact s t he bi ddi ng,

hi r i ng, and r epor t i ng pr ocedur es f or const r uct i on compani es t hat

wor k on or bi d f or pr oj ect s or cont r act s f ul l y or par t i al l y

f unded or admi ni st er ed by t he Di st r i ct . The I ndi vi dual

Pl ai nt i f f s ar gue t hat t hei r abi l i t y t o secur e wor k i s

nonet hel ess adver sel y af f ect ed by t he Act s r equi r ement s,

despi t e t he f act t hat t hose r equi r ement s do not appear t o appl y

t o t hem. See Pl s. Opp n at 8. They ar gue t hat t hi s t ype of

i nj ur y has been f ound suf f i ci ent t o conf er st andi ng i n si mi l ar


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cases. Id. ( ci t i ng Util. Contractors Assn of New England, Inc.

v. City of Fall River , No. 10- 10994- RZW, 2011 U. S. Di st . LEXI S

114333 ( D. Mass. Oct . 4, 2011) ) . I n Fall River , t he cour t

consi der ed a chal l enge t o a l ocal or di nance t hat r equi r ed t hat a

cer t ai n per cent age of wor ker s on pr oj ect s f unded by l ocal f unds,

f eder al gr ant s, or l oans be Fal l Ri ver r esi dent s. 2011 U. S.

Di st . LEXI S 114333, at *2- 3. The cour t hel d t hat t he i ndi vi dual

pl ai nt i f f i n t he case had st andi ng because he al l eged t hat he

coul d not compet e f ai r l y i n t he bi ddi ng pr ocess. Id. at *7- 8.

Accor di ng t o t he cour t , i n t he cont ext of st andi ng, i t i s

i mmat er i al whet her t he pl ai nt i f f has act ual l y bi d on or appl i ed

f or a j ob at a pr oj ect cover ed by t he or di nance, r at her ,

i nj ur y i n f act i s t he i nabi l i t y t o compet e on an equal

f oot i ng. Id. at *8 ( quot i ng Ne. Fla. Chapter of Associated

Gen. Contractors of Am. v. City of Jacksonville, Fla. , 508 U. S.

656, 666 ( 1993) ) ( i nt er nal quot at i on mar ks omi t t ed) .

The Cour t f i nds t hat t he i ndi vi dual Pl ai nt i f f s have al l eged

a suf f i ci ent i nj ur y i n f act f or t he pur poses of Ar t i cl e I I I

st andi ng. They have al l eged a concr et e i nj ur y namel y, t hat as

non- Di st r i ct r esi dent s, t hey cannot r egi st er f or t he Fi r st

Sour ce Regi st er and t hat t hei r abi l i t y t o compet e f or

const r uct i on j obs t her ef or e has been and wi l l cont i nue t o be


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adver sel y i mpact ed by t he Act . 4 As t he Supr eme Cour t i nst r uct ed

i n Lujan , [ a] t t he pl eadi ng st age, gener al f act ual al l egat i ons

of i nj ur y r esul t i ng f r om t he def endant s conduct may suf f i ce,

f or on a mot i on t o di smi ss [ cour t s] pr esume t hat gener al

al l egat i ons embr ace t hose speci f i c f act s t hat ar e necessar y t o

suppor t t he cl ai m. 504 U. S. at 561 ( quot i ng Lujan v. Natl

Wildlife Fedn , 497 U. S. 871, 889 ( 1990) ) .

I ndeed, t he I ndi vi dual Pl ai nt i f f s ar e i n a s i mi l ar pos i t i on

as t he pl ai nt i f f s f ound t o have st andi ng i n Northeastern Florida

Chapter of Associated General Contractors of America v. City of

Jacksonville, Florida , 508 U. S. 656 ( 1993) . Ther e, an

associ at i on of cont r act or s chal l enged a l ocal or di nance t hat

set asi de cont r act s f or mi nor i t i es and women on equal

pr ot ect i on gr ounds. I n t hat cont ext , t he Supr eme Cour t hel d

t hat [ w] hen t he gover nment er ect s a bar r i er t hat makes i t mor e

di f f i cul t f or member s of one gr oup t o obt ai n a benef i t t han i t

i s f or member s of anot her gr oup, a member of t he f or mer gr oup

seeki ng t o chal l enge t he bar r i er need not al l ege t hat he woul d

4 The Di st r i ct s ar gument t o t he cont r ar y i s unavai l i ng. TheDi st r i ct cont ends t hat t he Act does not pr ohi bi t t he i ndi vi dualPl ai nt i f f s f r om pur sui ng t hei r pr of essi on i n t he Di s t r i ct orr egul at e t hei r abi l i t y t o engage i n busi ness i n t he Di st r i ct asnon- ci t i zens. Def s. MTD at 19- 20. However , as t he di scussi onof Northeastern Florida i ndi cat es, t he i ssue i s whet her t heI ndi vi dual Pl ai nt i f f s ar e i n a l ess compet i t i ve posi t i on vi s avi s t hei r Di st r i ct count er par t s on pr oj ect s cover ed by t he Fi r stSour ce Act . That t hey ar e st i l l el i gi bl e f or empl oyment ont hose pr oj ect s does not def eat t hei r st andi ng.


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have obt ai ned t he benef i t but f or t he bar r i er i n or der t o

est abl i sh st andi ng. Id. at 666. I nst ead, t he i nj ur y i n f act

i s t he deni al of equal t r eat ment r esul t i ng f r om t he i mposi t i on

of t he bar r i er , not t he ul t i mat e i nabi l i t y t o obt ai n t he

benef i t . Id. I n a chal l enge t o a r esi dent i al pr ef er ence

s t at ut e l i ke t he Fi r s t Sour ce Act , t he i nj ur y i n f ac t i s t he

i nabi l i t y t o compet e on an equal f oot i ng i n t he bi ddi ng pr ocess,

not t he l oss of cont r act . Id. ( ci t i ng City of Richmond v. J.

A. Croson Co. , 488 U. S. 469, 493 ( 1989) ) .

Thus, t he I ndi vi dual Pl ai nt i f f s have est abl i shed st andi ng

because t hey have demonst r at ed t hat t hey ar e abl e and r eady t o

wor k on pr oj ect s cover ed by t he Fi r st Sour ce Act and t hat t he

Act pr event s t hem f r om doi ng so on an equal basi s. Id. ; see

also Dynalantic Corp. v. Dept of Def. , 115 F. 3d 1012, 1015- 16

( D. C. Ci r . 1997) ( f i ndi ng t hat a pl ai nt i f f t hat woul d not have

qual i f i ed f or t he Smal l Busi ness Associ at i on s set - asi de pr ogr am

and di d not wi sh t o par t i ci pat e i n t he pr ogr am never t hel ess had

st andi ng because i t s i nj ur y was i t s l ack of oppor t uni t y t o

compet e f or Def ense Depar t ment cont r act s r eser ved f or f i r ms

t hat coul d par t i ci pat e i n t he pr ogr am) .

The I ndi vi dual Pl ai nt i f f s have al so est abl i shed causat i on

and r edr essabi l i t y. Pl ai nt i f f s cannot be l i s t ed on t he Fi r s t

Sour ce Regi st er because onl y Di st r i ct r esi dent s can be l i st ed.

And, but f or t he Act , t he I ndi vi dual Pl ai nt i f f s woul d not have


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t o cont end wi t h pr ef er ent i al hi r i ng r equi r ement s f or Di st r i ct

r esi dent s on pr oj ect s val ued at l ess t han $5 mi l l i on, or by

t r ade f or cer t ai n l ar ge- scal e pr oj ec ts f or whi ch t he Di s t r i c t s

f i nanci al assi st ance i s mor e t han $5 mi l l i on. I t does not

def eat t hei r st andi ng, as t he Di st r i ct ar gues, t hat t hey have

f ai l ed t o al l eged [ si c] any speci f i cs as t o when or how t hei r

empl oyment choi ces have been af f ect ed by any ot her ent i t y s

r egul at i on by t he Di st r i ct . Def s. MTD at 18 ( emphasi s i n

or i gi nal ) .

2. Met r o Washi ngt on and t he Cor por at e Pl ai nt i f f s

Because Met r o Washi ngt on i s an associ at i on, i t may sue i n

i t s own r i ght or on behal f of i t s member s. Met r o Washi ngt on

ar gues t hat i t has sat i sf i ed t he r equi r ement s f or bot h

associ at i onal and or gani zat i onal st andi ng. Because t he t wo

Cor por at e Pl ai nt i f f s ar e member s of Met r o Washi ngt on, t he Cour t

wi l l consi der t hei r st andi ng i n t he cont ext of Met r o

Washi ngt on s associ at i onal st andi ng.

[ A] n associ at i on may have st andi ng t o asser t t he cl ai ms of

i t s member s even wher e i t has suf f er ed no i nj ur y f r om t he

chal l enged act i vi t y. Hunt v. Wash. State Apple Adver. Commn ,

432 U. S. 333, 342 ( 1977) ( ci t at i ons omi t t ed) . A pl ai nt i f f has

associ at i onal st andi ng t o sue on behal f of i t s member s i f : ( 1)

at l east one of i t s member s woul d have st andi ng t o sue i n hi s

own r i ght , ( 2) t he i nt er est s t he associ at i on seeks t o pr ot ect


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ar e ger mane t o i t s pur pose, and ( 3) nei t her t he cl ai m asser t ed

nor t he r el i ef r equest ed r equi r es t hat an i ndi vi dual member of

t he associ at i on par t i ci pat e i n t he l awsui t . Chamber of

Commerce v. EPA , 642 F. 3d 192, 200 ( D. C. Ci r . 2011) ; see also

Hunt , 432 U. S. at 343.

The Cor por at e Pl ai nt i f f s ar e bot h member s of Met r o

Washi ngt on and cl ai m t o adher e t o t he or gani zat i on s phi l osophy

of r ewar di ng empl oyees based on i ndi vi dual mer i t and

per f or mance. Compl . 4- 6. They have been benef i ci ar i es as

def i ned by t he Act and ant i ci pat e t hat t hey wi l l cont i nue t o be

benef i ci ar i es f or f ut ur e pr oj ect s. They al l ege t hat t he Act has

made i t mor e di f f i cul t f or t hem t o bi d on pr oj ect s t hat t he

Di st r i ct f unds i n whol e or i n par t , or t hat i t admi ni st er s , and

t hat t hey have had t o i ncr ease t he t i me spent on admi ni st r at i ve

mat t er s as a r esul t of t hei r compl i ance wi t h t he Fi r st Sour ce

Act . Id. 16. For i nst ance, Pl ai nt i f f Mi l l er and Long al l eges

t hat i t s exper i ence under t he Fi r st Sour ce Act has been t hat i t

has t o screen appr oxi mat el y 60 Di st r i ct appl i cant s t o hi r e 25

wor ker s, t he maj or i t y of whom ar e not empl oyed si x mont hs l at er .

Id. I t cont ends t hat t hi s scr eeni ng number i s t hr ee t i mes

hi gher f or Di st r i ct r esi dent s t han f or r esi dent s of Mar yl and and

Vi r gi ni a. 5 Id.

5 Ther e ar e no speci f i c al l egat i ons r egar di ng Pl ai nt i f f Hawki nsEl ect r i cal Const r uct i on of D. C.


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I n addi t i on t o t hese admi ni st r at i ve cost s, t he Cor por at e

Pl ai nt i f f s al l ege t hat t he requi r ement s of t he Act have i mposed

addi t i onal cost s t hat t hey woul d not have i ncur r ed but f or t he

Act , such as decr eased pr oduct i vi t y and mor al e, hi gher l egal

f ees, and cost s associ at ed wi t h meet i ng r epor t i ng obl i gat i ons.

Id. 17, 33, 42. The Cor por at e Pl ai nt i f f s al so cl ai m t hat

t hey suf f er a compet i t i ve di sadvant age i n compar i son t o

const r uct i on compani es t hat do not t r y t o compl y wi t h t he Act ,

t hat do not oppose ent er i ng i nt o Empl oyment Agr eement s t hat l i nk

hi r i ng t o r esi dency, or t hat ar e abl e t o secur e wai ver s or

exempt i ons. 6 Id. 18, 28, 34, 44, 54. The Cor por at e

Pl ai nt i f f s al l ege t hat t hey wi l l cont i nue t o i ncur such cost s

i nt o t he f ut ur e under t he Amended Act . Id.

The Cor por at e Pl ai nt i f f s f ur t her al l ege t hat t hey have

suf f er ed a compet i t i ve economi c i nj ur y because t hey have

i ncur r ed cos t s ( f or t r ai ni ng, r ecrui t i ng, hi r i ng, and

super vi si on) and a di sr upt i on i n busi ness as a r esul t of

compl yi ng wi t h t he Act . Pl s. Opp n at 12 ( r ef er enci ng speci f i c

por t i ons of t he Compl ai nt ) . Accor di ng t o Pl ai nt i f f s, such a

showi ng i s suf f i ci ent t o est abl i sh t hat t hey have suf f er ed

6 The Cor por at e Pl ai nt i f f s do not seem t o be al l egi ng t hat t heycoul d not secur e such wai ver s, t hough t hey compar e t hemsel ves t ohypot het i cal cont r act or s who ar e abl e t o secur e wai ver s wher et hey ar e not .


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i nj ur y i n f act . Id. Fi nal l y, t he Cor por at e Pl ai nt i f f s ar gue

t hat t hey have been i nj ur ed by t he pr ospect of i ncur r i ng t he

penal t i es i n t he Amended Act ; however , t hey have not al l eged

t hat t hey have pai d any penal t i es under t he Act as enact ed. 7

Accor di ng t o t he Cor por at e Pl ai nt i f f s , however , t he Di st r i ct s

vol unt ar y deci si on not t o enf or ce t he Fi r st Sour ce Act does not

def eat t hei r st andi ng. Id. ( ci t i ng Util. Contractors , 2011

U. S. Di st . LEXI S 114333, at *8 ( hol di ng t hat t he f act t hat

def endant deci ded not t o enf or ce t he chal l enged r egul at i on di d

not def eat pl ai nt i f f s s t andi ng) ) .

I n suppor t of t hei r ar gument , Pl ai nt i f f s ci t e t o Air

Transport Association of America v. Export-Import Bank , wher e

t he cour t det er mi ned t hat an associ at i on r epr esent i ng sever al

member ai r l i nes had al l eged t hat i t s member s had suf f er ed a

compet i t i ve i nj ur y suf f i ci ent t o conf er st andi ng. 878 F. Supp.

2d 42, 55- 63 ( 2012) . The Ai r Tr anspor t Associ at i on ( ATA)

chal l enged t he deci si on of t he Expor t - I mpor t Bank t o pr ovi de

l oan guar ant ees t o Ai r I ndi a, ar gui ng t hat t he guar ant ees

vi ol at ed t he Expor t - I mpor t Bank Act . Bef or e r eachi ng t he

mer i t s, t he cour t consi der ed whet her t he ATA had associ at i onal

st andi ng t o pr oceed on behal f of ni ne member ai r l i nes by

7 Nor coul d t hey, accor di ng t o t he Di st r i ct , because t hei mposi t i on of penal t i es f or noncompl i ance has never occur r edand no cont r act or has been f i ned f or noncompl i ance si nce t he l awwas enact ed. Commi t t ee Repor t at 7.


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assessi ng whet her i t s member s goi ng f or war d woul d have st andi ng

t o sue i n t hei r own r i ght . 878 F. Supp. 2d at 54. The ATA

ar gued t hat t he Bank s al l egedl y unl awf ul l oan guar ant ees had

i nj ur ed i t s member s i n t he past and t hat t he guar ant ees at i ssue

woul d i mmi nent l y i nj ur e i t s member s because f or ei gn ai r l i nes

woul d be al l owed t o bor r ow at cheaper r at es, t hus i ncr easi ng

compet i t i on i n i nt er nat i onal t r avel . Id. at 56. I n deci di ng

whet her t he ATA had compet i t or st andi ng, t he cour t expl ai ned

t hat i n or der t o i nvoke compet i t or st andi ng, a pl ai nt i f f need

not show t hat t he i nj ur y f r om i ncr eased compet i t i on has al r eady

occur r ed. Id. at 56. To t he cont r ar y, as l ong as a pl ai nt i f f

can demonst r at e an i mmi nent i ncr ease i n compet i t i on, t he

cour t r ecogni zes t hat t hat i ncrease . . . wi l l al most cer t ai nl y

cause an i nj ur y i n f act . Id. ( quot i ng La. Energy & Power Auth.

v. FERC , 141 F. 3d 364, 367 ( D. C. Ci r . 1998) ) . Never t hel ess, t he

cour t st r essed t hat t he i ncr ease i n compet i t i on must be i mmi nent

and not mer el y specul at i ve f or a pl ai nt i f f t o i nvoke compet i t or

st andi ng. Id. Thus, t o demonst r at e a const i t ut i onal l y

suf f i ci ent compet i t i ve i nj ur y, a pl ai nt i f f must show t hat t he

chal l enged act i on has t he cl ear and i mmedi at e pot ent i al t o cause

compet i t i ve har m. Id. ( i nt er nal ci t at i ons and quot at i on mar ks

omi t t ed) .

Pl ai nt i f f s r el i ance on Air Transport i s mi spl aced. Unl i ke

t he Cor por at e Pl ai nt i f f s her e, t he ATA pr ovi ded det ai l ed f act ual


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i nf or mat i on about how new pl anes f or f or ei gn ai r l i nes woul d

compet e wi t h ATA member ai r l i nes on par t i cul ar r out es bet ween

I ndi a and t he Uni t ed St at es. Id. at 58- 59. Thi s ar gument was

suppor t ed by decl ar at i ons of i ndust r y exper t s. Id. On t he

basi s of t hi s f act ual showi ng, t he cour t hel d t hat t he ATA had

al l eged an appr opr i at e i nj ur y. Id. at 63. No Pl ai nt i f f has

made such a f act ual showi ng her e. I ndeed, as Def endant s ar gue,

t he Compl ai nt f ai l s t o pr ovi de any det ai l s about speci f i c

pr oj ect s or t he i mpact of t he Act on t he Cor por at e Pl ai nt i f f s

cost s f or t hose pr oj ect s. Def s. MTD at 15 n. 25, 17.

Def endant s ar gue t hat t he i nj ur i es cl ai med by t he Cor por at e

Pl ai nt i f f s ar e t hus not onl y specul at i ve, but al so t hat t hey ar e

not hi ng mor e t han al l egat i ons of f ut ur e i nj ur y t hat cannot

sat i sf y t he r equi r ement s of Ar t i cl e I I I s t andi ng. Def s. Repl y

at 6. Fur t her , t he Di s t r i c t cont ends t he Pl ai nt i f f s i nvocat i on

of compet i t or st andi ng, whi ch r ecogni ze[ es] t hat economi c

act or s suf f er [ an] i nj ur y i n f act when agenci es l i f t r egul at or y

r est r i ct i ons on t hei r compet i t or s or ot her wi se al l ow i ncr eased

compet i t i on agai nst t hem, i s l egal l y def i ci ent . Id. at 7

( quot i ng Sherley v. Sebelius , 610 F. 3d 69, 72 ( D. C. Ci r . 2010)

( quot i ng La. Energy & Power Auth. v. FERC , 141 F. 3d 364, 367

( D. C. Ci r . 1998) ) . Accor di ng t o t he Di st r i ct , t he Fi r st Sour ce

Act does not l i f t r es t r i ct i ons on pl ai nt i f f s compet i t or s , or

ot her wi se al l ow i ncr eased compet i t i on agai nst t hem because t he


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pr ovi si ons of t he Fi r st Sour ce Act appl y i dent i cal l y t o al l

cover ed ent i t i es, bot h wi t hi n and out si de t he Di st r i ct . Id.

Def endant s are cor r ect t hat t he Cor por at e Pl ai nt i f f s have

not est abl i shed a compet i t i ve i nj ur y suf f i ci ent t o conf er

st andi ng, especi al l y because t he Act appl i es t o al l act or s i n

t he mar ket , and does not di f f er ent i at e bet ween cont r act or s.

However , t o t he ext ent t hat t he Cor por at e Pl ai nt i f f s have

al l eged t hat t hey must i ncur addi t i onal cost s t o compl y wi t h t he

Act , t hey have al l eged a suf f i ci ent i nj ur y. For i nst ance, i n

Investment Co. Institute v. United States CFTC , t he cour t f ound

t hat pl ai nt i f f s who al l eged t hat t hey woul d f ace an i ncr eased

r egul at or y bur den and t he associ at ed cost s of t hat r egul at i on

had al l eged an i nj ur y i n f act f or t he pur poses of Ar t i cl e I I I

st andi ng. 891 F. Supp. 2d. 162, 185 ( D. D. C. 2012) . The cour t

al so hel d t hat a deci si on t hat i nval i dat ed t he chal l enged

r egul at i on woul d f ul l y r edr ess t he i nj ur i es al l eged. Id.

Si mi l ar l y, her e, t he al l eged addi t i onal admi ni st r at i ve and ot her

cost s al l eged by t he Cor por at e Pl ai nt i f f s ar e di r ect l y t r aceabl e

t o t hei r cur r ent and f ut ur e compl i ance wi t h t he Fi r st Sour ce

Act , and a deci si on by t hi s Cour t i nval i dat i ng t he Act , t her eby

r emovi ng t he r equi r ement t hat t hey i ncur t hose cost s, woul d

di r ect l y r edr ess t hei r i nj ur i es. Thus, t he Cor por at e

Pl ai nt i f f s al l egat i ons of mandat or y compl i ance wi t h t he Fi r st

Sour ce Act , and t he admi ni st r at i ve r equi r ement s t hat ar e


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necessar y f or compl i ance, ar e suf f i ci ent t o sat i sf y t he

const i t ut i onal r equi r ement of i nj ur y i n f act . See Assn of Am.

R.R.S. v. Dept of Transp. , 38 F. 3d 582, 585- 86 ( D. C. Ci r . 1994)

( st at i ng t hat t her e i s undeni abl y a l i ve, concr et e case or

cont r over sy ; t he [ pl ai nt i f f s ] al l ege t hat t hey ar e mat er i al l y

har med by t he addi t i onal r egul at or y bur den i mposed upon t hem as

a r esul t of a f eder al agency s unl awf ul adopt i on of a r ul e, and

seek t o have t hat r ul e over t ur ned. We hol d under t he

ci r cumst ances t hat t he [ pl ai nt i f f s] ha[ ve] st andi ng) ; Chevron

U.S.A., Inc. v. FERC , 193 F. Supp. 2d 54, 60- 61 ( D. D. C. 2002)

( hol di ng t hat compl i ance wi t h r epor t i ng obl i gat i ons was

suf f i ci ent i nj ur y i n f act t o conf er s t andi ng on pl ai nt i f f s ) .

Under t hese ci r cumst ances, t he Cour t hol ds t hat t he

Cor por at e Pl ai nt i f f s have st andi ng. Ther ef or e, because t hey can

br i ng t hi s act i on i n t hei r own r i ght ; because Met r o Washi ngt on

has al l eged t hat i t s i ndi vi dual mer i t phi l osophy i s ger mane t o

i t s pur pose; and because t he par t i ci pat i on of i t s member s i s not

r equi r ed t o pr ovi de t hem wi t h t he r el i ef t hey seek, t he Cour t

f i nds t hat Met r o Washi ngt on al so has associ at i onal st andi ng t o

pr oceed. 8

8 Because t he Cour t f i nds t hat Met r o Washi ngt on has associ at i onalst andi ng, i t need not consi der whet her i t al so hasor gani zat i onal st andi ng.


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B. Privileges and Immunities Clause

Pl ai nt i f f s cont end t hat t he Fi r st Sour ce Act vi ol at es t he

Pr i vi l eges and I mmuni t i es Cl ause of t he Const i t ut i on, whi ch

pr ovi des t hat t he Ci t i zens of each St at e shal l be ent i t l ed t o

al l Pr i vi l eges and I mmuni t i es of Ci t i zens i n t he sever al

St at es . 9 U. S. Const . ar t . I V, 2, cl . 1. The Cl ause pr event s

st at es f r om enact i ng l egi sl at i on t hat woul d di scr i mi nat e agai nst

r esi dent s of ot her st at es i n f avor of t hei r own. See Supreme

Court of New Hampshire v. Piper , 470 U. S. 274, 285 n. 18 ( 1985) .

Def endant s ar gue t hat Pl ai nt i f f s have f ai l ed t o st at e a cl ai m

wi t h r espect t o t he Pr i vi l eges and I mmuni t i es Cl ause because,

assumi ng t hat t he Cl ause appl i ed t o t he Di st r i ct , t he Fi r st

Sour ce Act does not vi ol at e t he Cl ause.

As an i ni t i al mat t er , t he par t i es di sagr ee over whet her t he

Pr i vi l eges and I mmuni t i es Cl ause appl i es t o t he Di st r i ct of

Col umbi a because, by i t s expr ess t er ms, i t r ef er ences

[c ] i t i zens of each St at e. U. S. Cons t . ar t . I V, 2, cl . 1.

Because t he Di st r i ct i s not a st at e, i t i s an open quest i on

whet her t he Cl ause appl i es t o i t . See Banner v. United States ,

9

The Pr i vi l eges and I mmuni t i es Cl ause does not appl y t ocor por at i ons, t hus t he t wo Cor por at e Pl ai nt i f f s and Met r oWashi ngt on do not have st andi ng t o chal l enge t he Fi r st Sour ceAct under t he Cl ause. See W. & S. Life Ins. Co. v. Bd. ofEqualization of Cal. , 451 U. S. 648, 656 ( 1981) ; Hemphill v.Orloff , 277 U. S. 537, 548- 50 ( 1928) . However , t he I ndi vi dualPl ai nt i f f s do have st andi ng t o chal l enge t he Fi r st Sour ce Actunder t he Pr i vi l eges and I mmuni t i es Cl ause.


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303 F. Supp. 2d 1, 25 ( D. D. C. 2004) . I n t hei r mot i on t o

di smi ss, Def endant s di d not addr ess t he appl i cabi l i t y of t he

Cl ause t o t he Di st r i ct , s t at i ng i nst ead i n a f oot not e t hat :

Whi l e t he Di st r i ct does not concede t hat t he Cl ause appl i es t o

i t , f or t he pur poses of t hi s Mot i on, t he Di st r i ct assumes t hat

i t does. Def s. MTD at 20 n. 29. Pl ai nt i f f s const r ued t hi s

f oot not e as a concessi on t hat t he Cl ause appl i ed f or t he

pur poses of Def endant s mot i on t o di smi ss, Pl s. Opp n at 16

n. 7, whi ch Def endant s di sput ed i n t hei r r epl y, Def s. MTD at 8.

On t he basi s of t hi s di sput e, t he Cour t or der ed suppl ement al

br i ef i ng on t he i ssue of whet her t he Pr i vi l eges and I mmuni t i es

Cl ause appl i es t o t he Di st r i ct . See Mar ch 23, 2013 Mi nut e

Or der . The par t i es f i l ed suppl ement al r esponses i n Apr i l 2013 -

- Def endant s ar gued t hat t he Cl ause di d not appl y t o t he

Di s t r i c t , wher eas Pl ai nt i f f s ar gued t hat i t di d. See Def s .

Supp. P&I Mem. ; Pl s. Supp. P&I Mem.

The D. C. Ci r cui t has onl y addr ess ed t he appl i cabi l i t y of

t he Pr i vi l eges and I mmuni t i es Cl ause t o t he Di st r i ct on t wo

occasi ons, bot h pr i or t o t he enact ment of t he Home Rul e Act i n

1973. Fi r s t , i n Duehay v. Acacia Mutual Life Insurance Co. , t he

cour t hel d t hat t he Cl ause was i nappl i cabl e t o t he Di st r i ct

because [ i ] t i s a l i mi t at i on upon t he power s of t he st at es and

i n no way af f ect s t he power s of Congr ess over t he t er r i t or i es

and t he Di st r i ct of Col umbi a. 105 F. 2d 768, 775 ( D. C. Ci r .


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1939) . The Ci r cui t agai n f ound t hat t he Cl ause di d not appl y t o

t he Di st r i ct t he f ol l owi ng year i n Neild v. District of

Columbia , 110 F. 2d 246 ( D. C. Ci r . 1940) . Ther e, ci t i ng Duehay ,

t he Cour t not ed i n a f oot not e t hat t he pr i vi l eges and

i mmuni t i es cl ause i s a l i mi t at i on upon t he st at es onl y and i n no

way af f ect s t he power s of Congr ess over t he Di st r i ct of Col umbi a

or t he t er r i t or i es. 110 F. 2d at 249 n. 3. Si nce 1940, t he

Supr eme Cour t has f ound t hat t he Cl ause does appl y t o cer t ai n

t er r i t or i es, t hough cruci al l y, t he or gani c act s f or t hose

t er r i t or i es i ncl ude a pr ovi si on maki ng t he Pr i vi l eges and

I mmuni t i es Cl ause appl i cabl e. See Chase Manhattan Bank v. South

Acres Dev. Co. , 434 U. S. 236 ( 1978) ( not i ng t hat Congr ess

expl i ci t l y ext ended t he Pr i vi l eges and I mmuni t i es Cl ause t o Guam

i n i t s Or gani c Act) ; Mullaney v. Anderson , 342 U. S. 415 ( 1952)

( hol di ng t hat t he cl ause appl i ed t o Al aska, whi ch was a

t er r i t or y on i t s way t o becomi ng a st at e) . The Home Rul e Act

cont ai ns no si mi l ar l anguage; and t he Di st r i ct , unl i ke ot her

t er r i t or i es, i s par t i al l y gover ned by Congr ess.

The Di st r i ct has not moved t o Di smi ss on t he gr ounds t hat

t he Fi r st Sour ce Act i s a val i d r esi dence based cl assi f i cat i on

because t he Pr i vi l eges and I mmuni t i es Cl ause i s not a bar on

Di st r i ct act i on. Rat her , i t ar gues t hat t he Fi r st Sour ce Act i s

a val i d r esi dence pr ef er ence under t he Pr i vi l eges and I mmuni t i es

Cl ause. Thus, f or t he pur poses of t hi s mot i on, t he Cour t need


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not r each t he quest i on of whet her t he Pr i vi l eges and I mmuni t i es

Cl ause appl i es t o t he Di st r i ct because t he Di st r i ct has not

sought r el i ef on t hat i ssue.

The Supr eme Cour t has l ong hel d t hat t he t he pr i vi l eges

and i mmuni t i es cl ause i s not an absol ut e. Toomer v. Witsell ,

334 U. S. 385, 396 ( 1948) . Equal t r eat ment f or ci t i zens,

r esi dent s, and nonr esi dent s has onl y been r equi r ed wi t h r espect

t o t hose pr i vi l eges and i mmuni t i es bear i ng upon t he vi t al i t y

of t he Nat i on as a si ngl e ent i t y. Baldwin v. Fish and Game

Commn of Montana , 436 U. S. 371, 383 ( 1978) . When det er mi ni ng

whet her a par t i cul ar r esi dency cl assi f i cat i on vi ol at es t he

Pr i vi l eges and I mmuni t i es Cl ause, t he cour t must conduct a t wo-

st ep anal ysi s. Fi r st , t he act i vi t y pur por t edl y t hr eat ened by

t he cl assi f i cat i on must be suf f i ci ent l y basi c t o t he l i vel i hood

of t he Nat i on as t o f al l wi t hi n t he pur vi ew of t he cl ause.

Supreme Court of Virginia v. Friedman , 487 U. S. 59, 64 ( 1988)

( i nt er nal quot at i on mar ks and ci t at i ons omi t t ed) . Second, i f

t he chal l enged r est r i ct i on depr i ves nonr esi dent s of a pr ot ect ed

pr i vi l ege, i t i s cons t i t ut i onal l y i mper mi ssi bl e i f the

r est r i ct i on i s not cl osel y r el at ed t o t he advancement of a

subst ant i al s t at e i nt er es t . Friedman , 487 U. S. at 65 ( ci t i ng

Piper , 470 U. S. at 284) .

The f i r st st ep of t he anal ysi s r equi r es t he cour t t o

consi der whet her t he Act bur dens a pr i vi l ege or i mmuni t y


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pr ot ect ed by t he Cl ause. United Bldg. & Constr. Trades Council

v. Mayor and Council of Camden , 465 U. S. 208, 218 ( 1984) .

Because not al l r esi dency cl assi f i cat i ons ar e const i t ut i onal l y

suspect , t he cour t must det er mi ne whet her t he non- r esi dent s

i nt er est i s f undament al t o pr omot i ng i nt er st at e har mony and t hus

cover ed by t he Cl ause. See Baldwin , 436 U. S. at 387 ( expl ai ni ng

t hat t he pr ot ect i ons of t he Cl ause appl y t o f undament al r i ght s,

whi ch ar e t hose i nvol vi ng basi c and essent i al act i vi t i es,

i nt er f er ence wi t h whi ch woul d f r ust r at e t he pur poses of t he

f or mat i on of t he Uni on) . The Supr eme Cour t has hel d t hat t he

abi l i t y t o pur sue a common cal l i ng i s one of t he most

f undament al of t hose pr i vi l eges pr ot ect ed by t he Cl ause.

Camden , 465 U. S. at 219 ( ci t i ng Baldwin , 436 U. S. at 387) .

Her e, Pl ai nt i f f s ar gue t hat t he Fi r st Sour ce Act

unconst i t ut i onal l y i mpedes t hei r abi l i t y t o pur sue t hei r common

cal l i ng. Compl . 90; Pl s. Opp n at 16- 17. Though publ i c

empl oyment i s di st i nct f r om pr i vat e empl oyment , t he Supr eme

Cour t has r ecogni zed t hat empl oyment on publ i c wor ks pr oj ect s i s

a f undament al r i ght pr ot ect ed by t he Pr i vi l eges and I mmuni t i es

Cl ause. I ndeed, [ t ] he oppor t uni t y t o seek empl oyment wi t h such

pr i vat e empl oyer s i s suf f i ci ent l y basi c t o t he l i vel i hood of t he

Nat i on as t o f al l wi t hi n t he pur vi ew of t he Pr i vi l eges and

I mmuni t i es Cl ause even t hough t he cont r act or s and subcont r act or s

t hemsel ves ar e engaged i n pr oj ect s f unded i n whol e or i n par t by


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t he ci t y. Camden , 465 U. S. at 221- 22. ( i nt er nal quot at i on

mar ks and ci t at i ons omi t t ed) . Never t hel ess, t hi s i s not t he end

of t he i nqui r y a r egul at i on t hat di scr i mi nat es agai nst a

pr ot ect ed pr i vi l ege may nonet hel ess be val i d wher e t her e i s a

subst ant i al r eason f or t he di f f er ence i n t r eat ment . Id. at

222.

Wher e a pr ot ect ed pr i vi l ege or i mmuni t y i s i mpl i cat ed by a

par t i cul ar st at e l aw or r egul at i on, t he st at e can def eat t he

chal l enge by demonst r at i ng t hat t her e i s somet hi ng t o i ndi cat e

t hat non- ci t i zens const i t ut e a pecul i ar sour ce of t he evi l at

whi ch t he st at ut e i s ai med. Hicklin v. Orbeck , 437 U. S. 518,

526 ( 1978) ; see also Camden , 465 U. S. at 222. The Supr eme Cour t

has expl ai ned t hat t he Pr i vi l eges and I mmuni t i es Cl ause does

not pr ecl ude di spar i t y of t r eat ment i n t he many si t uat i ons wher e

t her e ar e per f ect l y val i d i ndependent r easons f or i t . Toomer ,

334 U. S. at 396. I n t hose cases wher e such r easons exi st , t he

i nqui r y must be concer ned wi t h whet her . . . t he degr ee of

di scr i mi nat i on bear s a cl ose r el at i on t o t hem. Id. Cour t s

must al so gi ve due r egar d [ t o] t he pr i nci pal [ si c] t hat t he

St at es shoul d have consi der abl e l eeway i n anal yzi ng l ocal evi l s

and pr escr i bi ng appr opr i at e cur es. Id.

The Di st r i ct cont ends t hat t he Fi r st Sour ce Act i s

necessar y t o count er act t he gr ave economi c di spar i t y t hat i t

f aces as a r esul t of i t s i nabi l i t y t o l evy a commut er t ax on


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non- r esi dent s, who hol d 70 per cent of j obs i n t he Di st r i ct .

Def s. MTD at 22; see also Banner , 303 F. Supp. 2d at 26. Thi s

si t uat i on, l egal l y mandat ed by Congr ess i n t he Home Rul e Act ,

cr eat es a st r uct ur al i mbal ance unl i ke t hat f aced by any ot her

j ur i sdi ct i on i n t he count r y, one whi ch t he Fi r st Sour ce Act ai ms

t o al l evi at e. Id.

Pl ai nt i f f s ar gue t o t he cont r ar y t hat t he Di st r i ct has not

pr ovi ded a subst ant i al r eason f or t he di scr i mi nat i on caused by

t he Fi r st Sour ce Act . Accor di ng t o Pl ai nt i f f s, mor e t ax

r evenue i s not a suf f i ci ent r eason f or di scr i mi nat i ng agai nst

non- r es i dent s . Pl s . Opp n at 17- 19. Fur t her , Pl ai nt i f f s c l ai m

t he Act i s not nar r owl y t ai l or ed t o combat a par t i cul ar sour ce

of evi l because nonr esi dent s ar e not a pecul i ar sour ce of

unempl oyment i n t he Di st r i ct , nor ar e t hey t he sour ce of any

ot her l ocal evi l . Id. at 19 ( quot i ng Compl . 93, 114) .

The f act t hat t her e ar e mor e non- r esi dent s t han r esi dent s

wor ki ng i n t he Di st r i ct , accor di ng t o Pl ai nt i f f s , i s a sympt om

of ot her soci al and economi c i l l s. Id.

Pl ai nt i f f s poi nt out t hat vi r t ual l y ever y ot her r esi dence

pr ef er ence l aw t hat has been chal l enged on Pr i vi l eges and

I mmuni t i es gr ounds has been f ound t o be unconst i t ut i onal .

Pl ai nt i f f s ar e cor r ect about t he st at e of Pr i vi l eges and

I mmuni t i es Cl ause j ur i spr udence. Ever y case of whi ch t he Cour t

i s awar e has f ound t hat t he j ur i sdi ct i on i nvol ved used t he


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r esi dence pr ef er ence l aw pr i mar i l y as a means f or economi c

pr ot ect i oni sm. Unl i ke t he Di st r i ct , however , none of t hese

j ur i sdi ct i ons ar e l egal l y bar r ed f r om r ai si ng r evenue t hr ough

t he i mposi t i on of t axes, nor ar e t hey requi r ed t o submi t l ocal

l egi sl at i on t o Congr ess f or r evi ew.

For i nst ance, pl ai nt i f f s chal l engi ng a Wor cest er ,

Massachuset t s l aw t hat r equi r ed al l cont r act or s on publ i c

pr oj ect s t o al l ocat e 50 per cent of al l empl oyee wor k hour s t o

ci t y r esi dent s wer e gr ant ed a pr el i mi nar y i nj unct i on agai nst

enf or cement of t he l aw. Util. Contractors Assn of New England,

Inc. v. City of Worcester , 236 F. Supp. 2d 113 ( D. Mass. 2002) .

I n f i ndi ng t hat t he pl ai nt i f f s wer e l i kel y t o succeed on t he

mer i t s, t he cour t consi der ed t he const i t ut i onal i t y of t he

or di nance. Though t he ci t y ar gued t hat adver se empl oyment

condi t i ons i n Wor cest er wer e a subst ant i al r eason t hat j ust i f i ed

t he di scr i mi nat i on, t he cour t coul d not accept t hat nonr esi dent

empl oyees on publ i c pr oj ect s wer e t he par t i cul ar sour ce of t he

ci t y s empl oyment i ssues. Id. at 119- 20. I n r ul i ng f or t he

pl ai nt i f f s, t he cour t al so consi der ed whet her t he l aw had cur ed

t he empl oyment pr obl ems i t was enact ed t o r emedy. Id. Si mi l ar

or di nances have al so been st r uck down i n Fal l Ri ver and Qui ncy,

Massachuset t s. See Merit Constr. Alliance V. City of Quincy ,

No. 12- 10458, 2012 U. S. Di st . LEXI S 54210 ( D. Mass . Apr i l 18,

2012) ( f i ndi ng, on a mot i on f or pr el i mi nar y i nj unct i on, t hat a


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ci t y or di nance r equi r i ng t hat 33 per cent of empl oyees on publ i c

agency pr oj ect s be ci t y r esi dent s woul d vi ol at e t he Pr i vi l eges

and I mmuni t i es Cl ause despi t e t he ci t y s ar gument t hat ci t y

r esi dent s s houl d see a r et ur n on i nvest ment t hr ough j obs f r om

pr oj ect s t hat t hei r t ax dol l ar s wer e f undi ng) ; Util. Contractors

Assn of New England v. City of Fall River , No. 10994- RZW, 2011

U. S. Di st . LEXI S 114333 ( D. Mass. Oct . 4, 2011) ( hol di ng, i n

gr ant i ng a mot i on f or pr el i mi nar y i nj unct i on, t hat a ci t y

or di nance t hat r equi r ed 100 per cent of appr ent i ces and 50

per cent of al l ot her empl oyees on publ i c wor ks pr oj ect s be ci t y

r esi dent s woul d be i nval i d, especi al l y because t he ci t y had

of f er ed no j us t i f i cat i on f or t he cl assi f i cat i on) . 10

10 Pl ai nt i f f s al s o ci t e t o Camden , i n whi ch t he Supr eme Cour tr ever sed and r emanded a case i nvol vi ng a Pr i vi l eges and

I mmuni t i es Cl ause chal l enge t o a muni ci pal or di nance pr ovi di ngt hat at l east 40 per cent of t he empl oyees of cont r act or s andsubcont r act or s wor ki ng on ci t y f unded or admi ni st er ed pr oj ect sbe ci t y r esi dent s. 465 U. S. at 223. The ci t y of Camden ar guedt hat t he or di nance was const i t ut i onal because i t was necessar yt o count er act gr ave economi c and soci al i l l s, i ncl udi ngunempl oyment , a decl i ne i n popul at i on, and a r educt i on i n t henumber of busi nesses l ocat ed i n t he ci t y. Id. at 222.Accor di ng t o t he ci t y, t he par t i cul ar evi l t hat t he or di nancewas i nt ended t o addr ess was non- Camden r esi dent s empl oyed onci t y publ i c wor ks pr oj ect s . Id. The Cour t di d not i nval i dat et he st at ut e, but r emanded t he case f or f ur t her f act ual f i ndi ngsbecause i t coul d not assess t he ci t y s j ust i f i cat i on on t her ecor d bef or e i t . Id. at 222- 23. I n r emandi ng t he case, t heCamden Cour t emphasi zed t hat t he f act t hat Camden was expendi ngi t s own f unds or f unds i t admi ni st er s i n accor dance wi t h t het er ms of a gr ant was per haps t he cr uci al f act or [ ] t o beconsi der ed i n eval uat i ng whet her t he st at ut e s di scr i mi nat i onvi ol at es t he Pr i vi l eges and I mmuni t i es Cl ause. Id. at 221. I nt he wake of Camden , one cour t has uphel d a r esi dence pr ef er ence


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Si mi l ar l y, i n W.C.M. Window Co., Inc. v. Bernardi , a t hr ee

j udge panel of t he Sevent h Ci r cui t r ul ed t hat an I l l i noi s

r esi dence based cl assi f i cat i on vi ol at ed t he Pr i vi l eges and

I mmuni t i es Cl ause. 730 F. 2d 486 ( 7t h Ci r . 1984) . The I l l i noi s

st at ut e r equi r ed t hat cont r act or s on publ i c wor ks pr oj ect s f or

t he st at e or muni ci pal i t i es empl oy I l l i noi s l abor er s. Id. at

489. Under t he l aw, an I l l i noi s l abor er was def i ned as any

wor ker who had been a r esi dent of t he st at e f or at l east one

year . Id. at 494. I n ar gui ng t he l aw was const i t ut i onal , t he

st at e f ai l ed t o pr ovi de any evi dence of t he benef i t s of t he

r esi dent i al pr ef er ence. Id. at 497- 98. The cour t t hus r ul ed

t hat because t he I l l i noi s l aw i mpl i cat ed a f undament al r i ght

pr ot ect ed by t he Cl ause, and because t he st at e had not sat i sf i ed

i t s bur den of j ust i f yi ng t he di scr i mi nat i on, t he l aw was f ound

t o be unconst i t ut i onal . Id. at 498.

These cases, whi l e i nst r uct i ve, si mpl y do not descr i be t he

si t uat i on pr esent ed her e. The f act t hat t he Di st r i ct i s t he

onl y j ur i sdi ct i on i n t he count r y t hat cannot t ax commut er s 11 put s

l aw as f ur t her i ng a st at e s i nt er est i n combat i ng unempl oymentdi s par i t i es . State v. Antonich , 694 P. 2d 60 ( Wy. 1985) ( hol di ngt hat a st at e r esi dence pr ef er ence l aw nar r owl y addr essed t hegoal of r educi ng unempl oyment and t her ef or e di d not vi ol at e t hePr i vi l eges and I mmuni t i es Cl ause) .

11 The Supr eme Cour t r ecogni zed t he r i ght of one st at e t o t ax t hei ncome of non- r esi dent s i n 1920 i n Shaffer v. Carter , 252 U. S.37 ( 1920) . The Cour t hel d t hat a st at e may l evy a t ax on anonr esi dent who hol ds a j ob or oper at es a busi ness i n a st at e so


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i t i n a uni que posi t i on compar ed t o ot her j ur i sdi ct i ons t hat

have enact ed si mi l ar l egi sl at i on, and i ndeed, i t i s a par t i cul ar

evi l t hat onl y t he Di s t r i c t conf r ont s . 12 The Supr eme Cour t has

made cl ear t hat [ e] ver y i nqui r y under t he Pr i vi l eges and

I mmuni t i es Cl ause must . . . be conduct ed wi t h due r egar d f or

t he pr i nci pl e t hat t he st at es have consi der abl e l eeway i n

anal yzi ng l ocal evi l s and i n pr escr i bi ng appr opr i at e cur es,

especi al l y when a gover nment body i s mer el y set t i ng condi t i ons

on t he expendi t ur e of f unds i t cont r ol s. Camden , 465 U. S. at

222- 23 ( i nt er nal quot at i on mar ks and ci t at i ons omi t t ed) ; see

also Hicklin , 437 U. S. at 529. The Di st r i ct s det er mi nat i on

t hat t he Fi r st Sour ce Act i s an appr opr i at e response t o t he

uni que bur den pl aced on t he Di st r i ct by t he Congr essi onal l y-

l ong as t hat t ax i s no mor e oner ous t han t hat l evi ed on a st at er es i dent . Id. at 52. The Cour t r easoned t hat a non- r esi denthad an obl i gat i on t o pay f or t he cost of t he st at e s gover nment ,f r om whi ch t he nonr esi dent der i ved a benef i t . Id. at 52- 53.Fol l owi ng t he r ul e of Shaffer , ever y st at e i n t he count r y t hatl evi es an i ncome t ax on i t s own ci t i zens i mposes a t ax onnonr esi dent s who wor k or do busi ness i n t he st at e. See CCHSt at e Tax Gui de 15- 157. Some st at es have r eci pr ocalagr eement s wi t h sur r oundi ng st at es wher eby each agr ees not t ot ax t he i ncome of nonr esi dent s. Id.

12 Pl ai nt i f f s cont end t hat t he act ual sour ce of evi l t hat t heDi st r i ct conf r ont s i s Congr ess and t he ban on a commut er t ax i nt he Home Rul e Act . Whi l e t he Home Rul e Act may be t he l egalsour ce of t he ban, t he ef f ect of t he ban i s onl y f el t when anonr esi dent hol ds a j ob i n t he Di st r i ct and car r i es t hat r evenueback t o hi s or her home st at e.


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i mposed commut er t ax ban i s t her ef or e ent i t l ed t o some

def er ence. 13

Thus, accor di ng t o t he Di st r i ct , t he i nabi l i t y t o i mpose a

commut er t ax i s Di st r i ct s uni que evi l ; however , t he Cour t must

det er mi ne whet her t he degr ee of di scr i mi nat i on bear s a cl ose

r el at i on t o t hat evi l . Camden , 465 U. S. at 222 ( quot i ng

Toomer , 334 U. S. at 398) . The Di st r i ct ar gues t hat i t cannot

t ax commut er s by t he t er ms of t he Home Rul e Act , r esul t i ng i n a

par t i cul ar l y acut e pr obl em because appr oxi mat el y 70 per cent of

t he j obs i n t he Di st r i ct ar e hel d by commut er s. Def s. MTD at

22. The Di st r i ct al so ar gues t hat t he unempl oyment r at e i n t he

Di st r i ct exceeds t hat of sur r oundi ng j ur i sdi ct i ons and t he

count r y as a whol e as of August 2011, when t he amendment s t o

t he Act wer e bei ng consi der ed, t he unempl oyment r at e i n t he

Di st r i ct as a whol e was 11. 1 per cent . Commi t t ee Repor t at 3.

I n some war ds of t he ci t y, i t was as hi gh as 30 per cent . Id.

13 At or al ar gument , Pl ai nt i f f s ur ged t he Cour t t o deci de t hatt he Di st r i ct cannot even det er mi ne what const i t ut es a l ocal evi lf or t he pur poses of a pr i vi l eges and i mmuni t i es chal l enge.Accor di ng t o Pl ai nt i f f s, when Congr ess det er mi ned t hat t heDi st r i ct coul d not enact a commut er t ax, i t appar ent l ydet er mi ned t hat t hi s ban was not a l ocal evi l as wel l . Whi l eCongr ess may di ct at e much of what t he Di st r i ct may do, i t cannotdi ct at e whi ch pr obl ems t he Di st r i ct char act er i zes as most sever e as l ocal evi l s . See Camden , 465 U. S. at 222; Toomer , 334 U. S.at 396 ( expl ai ni ng t hat cour t s must gi ve due r egar d [ t o] t hepr i nci pal [ si c] t hat t he St at es shoul d have consi der abl e l eewayi n anal yzi ng l ocal evi l s and i n pr escr i bi ng appr opr i at e cur es) .


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The unempl oyment r at e i n t he Washi ngt on met r opol i t an ar ea, by

cont r ast , was 5. 3 per cent i n May 2012. Def s. MTD at 7.

Accor di ng t o t he Di st r i ct , t hi s r esul t s i n a per manent

st r uct ur al i mbal ance i n t he budget , wher eby t her e i s a gap

bet ween t he cost of pr ovi di ng ser vi ces and i t s capaci t y t o rai se

r evenue. Def s. MTD at 11 ( ci t i ng a GAO r epor t f r om 2003) .

The Di st r i ct cl ai ms t hat t he Fi r st Sour ce Act was enact ed i n an

ef f or t t o r emedy t he ver y r eal , si gni f i cant , and wel l -

est abl i shed st r uct ur al i mbal ances i n t he Di st r i ct s budget , id.

at 12, pr esumabl y, by pl aci ng a modest t humb on t he scal e i n

f avor of Di st r i ct r esi dent s wi t h r espect t o hi r i ng i n a nar r ow

subset of t he Di st r i ct economy const r uct i on j obs f unded or

admi ni st er ed by t he Di st r i ct gover nment .

Whi l e t he Cour t coul d be per suaded t hat t he i nabi l i t y t o

l evy a commut er t ax coul d be a pecul i ar evi l t hat coul d j ust i f y

t he r esi dent i al pr ef er ence i n t he Fi r st Sour ce Act , t he Cour t

f i nds i t i mpossi bl e t o eval uat e t he [ Di s t r i ct s ] j us t i f i cat i on

on t he r ecor d as i t now st ands. Camden , 465 U. S. at 223; see

also Dynalantic Corp. v. Dept of Def. , 503 F. Supp. 2d 262, 267

( D. D. C. 2007) ( denyi ng mot i ons f or summar y j udgment i n a case

eval uat i ng t he const i t ut i onal i t y of t he Smal l Busi ness

Associ at i on s s et asi de pr ogr am f or smal l busi nesses owned and

cont r ol l ed by di sadvant aged i ndi vi dual s because t he par t i es had

not demonst r at ed whet her t he asser t ed compel l i ng gover nment


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i nt er est had a st r ong basi s i n evi dence) . At t hi s st age i n t he

l i t i gat i on, t he Di s t r i c t has not pr ovi ded suf f i c i ent subst ant i ve

evi dence f or t he Cour t t o det er mi ne whet her t he Fi r st Sour ce

Act s r esi dent i al hi r i ng pr ef er ences f or const r uct i on pr oj ect s

f undi ng i n whol e or i n par t by t he Di st r i ct ar e nar r owl y

t ai l or ed t o addr ess t he uni que evi l of t he Di s t r i c t s i nabi l i t y

t o l evy a commut er t ax. Thi s i s a f act - i nt ensi ve i nqui r y t hat

cannot be r esol ved on a mot i on t o di smi ss - - t her e have been no

f i ndi ngs of f act made i n t hi s case, nor has t her e been any

di scover y and no decl ar at i ons have been f i l ed by anyone. And i t

woul d not be appr opr i at e f or t he Cour t t o make f act ual f i ndi ngs

or t ake j udi ci al not i ce of t he i mpact of t he Fi r st Sour ce Act at

t hi s j unct ur e. Thus, t he Di st r i ct s mot i on t o di smi ss

Pl ai nt i f f s pr i vi l eges and i mmuni t i es cl ai m i s her eby deni ed

wi t hout pr ej udi ce.

C. Commerce Clause

Pl ai nt i f f s al so ar gue t hat t he Fi r st Sour ce Act vi ol at es

t he Commer ce Cl ause, whi ch i s an i mpl i ci t r est r ai nt on st at e

aut hor i t y, even i n t he absence of a conf l i ct i ng f eder al

s t at ut e. United Haulers Assn v. Oneida-Herkimer Solid Waste

Mgmt. Auth. , 550 U. S. 330, 338 ( 2007) . Thi s r est r ai nt , known as

t he Dor mant Commer ce Cl ause, pr event s s t at es f r om i nt er f er i ng

wi t h Congr ess s power t o r egul at e i nt er st at e commer ce. However ,

f or st at e act i on t o i mpl i cat e t he Dor mant Commer ce Cl ause, t he


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act i on must t ake t he f or m of r egul at or y act i vi t y. Some cases

r un a di f f er ent cour se, however , and an except i on cover s St at es

t hat go beyond r egul at i on and t hemsel ves par t i cpat [ e] i n t he

mar ket so as t o exer ci s[ e] t he r i ght t o f avor [ t hei r ] own

ci t i zens over ot her s . Dept of Revenue of Ky. v. Davis , 553

U. S. 328, 339 ( 2008) ( quot i ng Hughes v. Alexandria Scrap Corp. ,

426 U. S. 794, 810 ( 1976) ) . Because [ t ] her e i s no i ndi cat i on of

a const i t ut i onal pl an t o l i mi t t he abi l i t y of St at es t hemsel ves

t o oper at e f r eel y i n t he f r ee mar ket , Reeves, Inc. v. Stake ,

447 U. S. 429, 437 ( 1980) , t he Dor mant Commer ce Cl ause i s

i nappl i cabl e. [ W] hen a st at e or l ocal gover nment ent er s t he

mar ket as a par t i ci pant i t i s not subj ect t o t he r est r ai n

First Source Decision

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