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HUDSON COUNTY BLDG. & CONSTR. TRADES COUNCIL v. CI

October 17, 1996

HUDSON COUNTY BUILDING AND CONSTRUCTION TRADES COUNCIL, AFL-CIO, Plaintiff,
v.
CITY OF JERSEY CITY, Defendant.



The opinion of the court was delivered by: DEBEVOISE

 DEBEVOISE, Senior District Judge.

 Plaintiff Hudson County Building and Construction Trades Council, AFL-CIO ("Trades Council") seeks declaratory judgment that City Ordinance 96-022 of defendant City of Jersey City violates the Privileges and Immunities Clause, Article IV, Section 2 of the United States Constitution, the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution and the National Labor Relations Act, 29 U.S.C. § 151, et seq. The Trades Council moves for summary judgment pursuant to Fed. R. Civ. P. 56. For the reasons set forth below, the motion for summary judgment will be denied.

 BACKGROUND

 On March 13, 1996, the Jersey City Municipal Council adopted City Ordinance 96-022, an Ordinance Establishing a First Source and Affirmative Action Employment and Local Business Contracting Program. City Ordinance 96-022 was signed by the Mayor of Jersey City on March 15, 1996 and became effective on April 2, 1996. On April 9, 1996, this action was filed.

 City Ordinance 96-022 mandates that recipients of economic incentives *fn1" from Jersey City execute a First Source and Affirmative Action Employment and Local Business Contracting Agreement ("First Source Agreement") and make a good faith effort to hire 51% Jersey City residents for construction and permanent jobs, 51% of whom are resident minorities and in non-traditional jobs, 6.9% of whom are resident females. *fn2" City Ordinance 96-022 at PP 1, 4(a). For construction jobs, good faith under City Ordinance 96-022 requires the recipient to comply with reporting requirements, to allow Jersey City access to the workplace and records and to have all contractors and subcontractors provide Jersey City with a statement that they will comply with City Ordinance 96-022 and the First Source Agreement. City Ordinance 96-022 at P 5. In cases where the contractor or subcontractor has a referral agreement with a union, good faith requires submission of a statement signed by an authorized union official in which the union agrees to act consistently with the recipient's good faith obligations. Id.

 In accordance with the provisions of the First Source Agreement, the failure of a union to sign a statement agreeing to act consistently with the recipient's good faith obligations will not excuse the recipient from compliance. First Source Agreement at P VII, 2(D) (iii). If a contractor or subcontractor cannot meet the good faith obligation because of noncompliance of a trade union, it must notify Jersey City of its manpower needs and request the referral of workers consistent with the goal. First Source Agreement, Exhibit A, Mandatory Construction Contract Provisions at P E(2). Once workers are referred by Jersey City, the contractor or subcontractor must consider them and if the contractor or subcontractor's work force is then consistent with the employment goals, such referred workers shall be maintained on a waiting list for first consideration in the event the work force does not meet the goals in the future. Id. at P E(2)(b)(iii). When the practices of a union will result in a work force inconsistent with the good faith obligation, the contractor or subcontractor is required to consider workers referred by Jersey City without regard to any applicable collective bargaining agreement or hiring hall arrangement it has with the union. Id. at P E(3).

 The Trades Council, with its constituent organizations, represents employees who reside in New Jersey, Pennsylvania and New York. The Trades Council negotiates collective bargaining agreements with employers in Hudson County. Such agreements usually provide for employers to recruit employees solely through the Trades Council's hiring halls which are open to all bargaining unit employees, including those from out-of-state. Employees are referred to jobs in accordance with the order by which they registered for work at the local union, regardless of their residence.

 At oral argument on September 24, 1996, Kevin M. Brown, Assistant Corporate Counsel, arguing on behalf of the City of Jersey City, explained the effect of the ordinance on recipients of economic incentives who are bound by collective bargaining agreements:

 
If the contractor has no leeway whatsoever to hire [Jersey City] residents because of an exclusive hiring arrangement he has with the union, there is nothing that we, the city, can do about that. We just urge that the contractor make whatever attempts it can to in good faith interview and hire Jersey City residents.

 Transcript of September 24, 1996 at 8. Mr. Brown modified the City of Jersey City's position on this matter in a subsequent submission in which he asserted:

 
If the sole reason for not hiring a Jersey City resident is because of a [collective bargaining agreement] between its contractor (or subcontractor) and a union, a recipient may be held to have breached the First Source Agreement [the "Agreement"). A recipient cannot claim to have acted in good faith by interviewing a Jersey City resident, if there is a contractual bar to ever hiring a resident.

 Jersey City Letter Brief of October 4, 1996 at 2.

 
MR. BROWN: Because given a Jersey City resident and a non Jersey City resident of equal skills, and given the fact that the developer's work force is less than 51 percent Jersey City resident, we would feel -- we would believe the contractor should then hire the Jersey City resident because they have accepted their discretionary benefit from the city.
 
THE COURT: What you're saying is he's not in good faith if he does not hire the Jersey City resident.
 
MR. BROWN: Yes, I'm prepared to say that.

 Transcript of September 24, 1996 at 19. Mr. Brown then changed his position:

 
MR. BROWN: I'm sorry, I'm going to have to backtrack on that, no. The requirements -- good faith is defined as interviewing, notification, disclosure. There is nothing in the ordinance that says the contractor must hire a Jersey City resident.
 
THE COURT: So as a matter of law the ordinance requires notification, it requires interviewing when referred, but it does not require hiring the resident even though the work force of the contractor is under 51 percent.
 
MR. BROWN: That is correct, your Honor. That is how the ordinance is written, yes.

 Transcript of September 24, 1996 at 19-20. Later in the argument, Mr. Brown turned back towards his ...


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