N.J. Building Trades Council v. City of Camden

Municipal programs, designed to encourage minority hiring as well as discourage "middle-class flight" from decaying cities, had to be "carefully tailored" and based on "substantial reason."

In the late 1970s and early 1980s, many cities whose economic woes were offset by federal grants for construction tried to multiply the grants' benefits by reserving jobs for local residents. This "protectionism" had mixed results.

The practices echoed commonplace and largely unchallenged Depression and post World War II-era residence requirements for teachers, police officers, and firefighters. But there was one highly significant difference. In the 1930s and 1940s, almost all municipal funds came out of municipal coffers. However, 25 years later much of the money came from the federal government--with federal strings attached. Moreover, suburbs had grown enormously and many of the federal grants given to cities came out of taxes paid by suburban residents.

Nonetheless, Camden imposed a 40 percent residence requirement for employees of contractors working on city construction projects, and also mandated one-year of residence to qualify for that preference. The Commerce Clause, the Privileges and Immunities Clause, and the Fourteenth Amendment's Equal Protection Clause were all invoked in the suit brought against the Camden plan by the Building and Construction Trades Council.

The city's own action, however, mooted the challenge under the Equal Protection Clause. The one-year qualification for preference was deleted and the simple fact of residence substituted. In addition, the 40 percent resident-hiring "quota" was dropped in place of a "goal." The Supreme Court's decision in White v. Massachusetts Council of Contruction Employers, Inc. (1983) mooted the challenge under the Commerce Clause. The Court held that the mayor of Boston had been acting as a market participant rather than a government regulator in issuing an executive order requiring 50 percent of jobs on city-funded construction jobs be reserved for city residents.

But the Supreme Court refused to accept the logic which the New Jersey Supreme Court used to reject the builders' challenge under the Privileges and Immunities Clause. The New Jersey Court argued that a municipal ordinance cannot give rise to the concerns addressed by the clause, because it was designed to place citizens of different states--not municipalities--on "the same footing." Nonetheless, Justice Renhquist argued basic fairness issues were involved. Out-of-state residents do not have "a chance to remedy at the polls any discrimination against them," the justice wrote in the majority decision. Consequently, state and municipal authorities were obliged to establish the necessity of such programs.

As precedent, Justice Rehnquist cited Mullancy v. Anderson (1952) which invalidated an "Alaska-Hire" preference on oil and case reserves owned by the state. In striking down Alaska's claim that "ownership in itself" was sufficient justification for discrimination, the court held the state's interest was "not absolute." Therefore, Rehnquist wrote:

Much the same analysis is appropriate to a city's efforts to bias private employment decisions in favor of its residents on construction projects funded with public monies.

Rehnquist found it:

. . . impossible to evaluate Camden's justification on the record as it now stands. No trial has ever been held in this case. No findings of fact have been made . . . It would not be appropriate for this court either to make factual determinations as an initial matter or take judicial notice of Camden's decay.

Therefore, Rehnquist ordered the case remanded back to the state supreme court "on the best method for making the necessary findings."

In dissenting, Justice Blackmun cited the historic importance of the Privileges and Immunities Clause. He observed that Andrew Hamilton described the clause as the basis of the Union. Even before the Constitution was adopted the colonies "had shown themselves willing and able . . . to override local protectionist ordinances," Justice Blackmun added. He cited a 1982 Supreme Court decision, also involving Alaska, to argue that the majority had improperly applied the Privileges and Immunities Clause. In that case, the Court struck down a statute allocating state treasury refunds based on length of residence under the equal protection, but not the Privileges and Immunities Clause.

Both the Alaska and Camden statutes discriminated primarily among state residents in a way that disadvantaged nonresidents as well but did not thereby implicate the underlying concerns of the Privileges and Immunities Clause, Justice Blackmun argued. While agreeing out-of-state residents can not seek a "remedy at the polls," Blackmun nevertheless contended the majority's reasoning ignored the fact that "disadvantaged state residents who turn to the legislature . . . further the interests of nonresidents as well as their own," citing cases in Georgia and California as examples.

The majority was overreaching in its distaste at "the unedifying sight of localities fighting for parochial gain at one another's expense," Justice Blackmun asserted. He also pointed out the majority had "conceded that its interpretation of the clause does not attach readily to a constitutional provision." Consequently, the dissenter argued, "the issue before us is not the desirability of the ordinance but its constitutionality--more particularly its constitutionality under the Privileges and Immunities Clause. Because I believe that the clause does not apply to discrimination based on municipal residence, I dissent."