Chamber of Commerce for Greater Phila. v. City of Phila.

319 F.Supp.3d 773

The CHAMBER OF COMMERCE FOR GREATER PHILADELPHIA, individually and on behalf of its members, Plaintiff,

v.CITY OF PHILADELPHIA and Philadelphia Commission on Human Relations, Defendants.

CIVIL ACTION No. 17-1548

United States District Court, E.D. Pennsylvania.

Filed April 30, 2018

Amir C. Tayrani, Miguel A. Estrada, Gibson, Dunn & Crutcher LLP, Washington, DC, Marc J. Sonnenfeld, Franco A. Corrado, Morgan, Lewis & Bockius LLP, Philadelphia, PA, Kevin M. Siegel, Marlton, NJ, for Plaintiff.

Nicole S. Morris, City of Philadelphia Solicitor's Office, Benjamin H. Field, Jane Lovitch Istvan, City of Philadelphia Law Department, Marcel S. Pratt, City of Philadelphia Law Department, Chair, Litigation Group, Philadelphia, PA, for Defendants.

MEMORANDUM OPINION

Goldberg, District Judge.

Responding to the problem of wage inequality for women and minorities, the City of Philadelphia has enacted an ordinance amending Title 9 of The Philadelphia Code to include provisions on wage equity. The ordinance has two parts. First, it prohibits an employer from inquiring about a prospective employee's wage history ("the Inquiry Provision"); and second, it makes it illegal for an employer to rely on wage history "at any stage in the employment process" to determine a salary for an employee ("the Reliance Provision"). The basic premise of the law's prohibitions is that allowing employers to formulate job offers based on prior salaries that are historically lower for women and minorities perpetuates the wage inequity problem.

Plaintiff, the Chamber of Commerce for Greater Philadelphia ("the Chamber"),¹ on behalf of itself and several of its members including Comcast Corporation, Children's Hospital of Philadelphia, and Bittender Construction, seeks a preliminary injunction, arguing that both the Inquiry and Reliance Provisions violate the First Amendment's free speech clause.

While the City of Philadelphia's efforts in passing the ordinance are certainly laudable, I conclude that the Inquiry Provision violates the First Amendment's free speech clause. Consequently the Chamber's Motion for a Preliminary Injunction as to that portion of the Ordinance will be granted. Because I conclude that the Reliance Provision does not implicate speech, and thus the First Amendment, the Chamber's Motion as to that portion of the ordinance will be denied.

FACTUAL AND PROCEDURAL BACKGROUND²

As of 2015, women in Pennsylvania earn 79 cents for every dollar a man earns, and African American women earn 68 cents for every dollar a man earns. Phila. Code. § 9-1131(1)(a) (citing United States Census Bureau Report 2015). As I note throughout this Opinion, the existence of this wage gap is not disputed.

The City of Philadelphia has endeavored to diminish the wage gap in Philadelphia through amendment of Title 9 of The Philadelphia Code to include provisions on wage equity ("the Ordinance").³ The relevant portions of the Ordinance are codified at Philadelphia Code § 9-1131 and state:

§ 9-1131. Wage Equity.

....

(2) Prohibition on Inquiries into Wage History.

(a) It is an unlawful employment practice for an employer, employment agency, or employee or agent thereof:

(i) To inquire about a prospective employee's wage history, require disclosure of wage history, or condition employment or consideration for an interview or employment on disclosure of wage history, or retaliate against a prospective employee for failing to comply with any wage history inquiry or for otherwise opposing any act made unlawful by this Chapter.

(ii) To rely on the wage history of a prospective employee from any current or former employer of the individual in determining the wages for such individual at any stage in the employment process, including the negotiation or drafting of any employment contract, unless such applicant knowingly and willingly disclosed his or her wage history to the employer, employment agency, employee or agent thereof.

(b) This subsection (2) shall not apply to any actions taken by an employer, employment agency, or employee or agent thereof, pursuant to any federal, state or local law that specifically authorizes the disclosure or verification of wage history for employment purposes.

(c) For purposes of this Section 9-1131, "to inquire" shall mean to ask a job applicant in writing or otherwise, and "wages" shall mean all earnings of an employee, regardless of whether determined on time, task, piece, commission or other method of calculation and including fringe benefits, wage supplements, or other compensation whether payable by the employer from employer funds or from amounts withheld from the employee's pay by the employer.

Id. § 9-1131(2).

Employers who violate the Ordinance are subject to civil and criminal penalties, including compensatory damages, up to $2,000 in punitive damages per violation, and an additional $2,000 and 90 days' incarceration for a repeat offense. Id. §§ 9-1105(1)(c)-(d), 9-1121(2).

Introduced in September 2016, the Ordinance was the subject of a hearing before Philadelphia City Council's Committee on Law and Government on November 22, 2016. After the Committee reported the bill favorably, it was unanimously passed on December 8, 2016. The Ordinance was signed into law by the Mayor of Philadelphia on January 23, 2017 and was scheduled to take effect on May 23, 2017.⁴ The Ordinance relies on the following findings:

(a) In Pennsylvania, women are paid 79 cents for every dollar a man makes, according to a United States Census Bureau 2015 report. Women of color are paid even less. African American women are paid only 68 cents to the dollar paid to a man, Latinas are paid only 56 cents to the dollar paid to men, and Asian women are paid 81 cents to the dollar paid to men.

(b) The gender wage gap has narrowed by less than one-half a penny per year in the United States since 1963, when the Congress passed the Equal Pay Act, the first law aimed at prohibiting gender-based pay discrimination, according to the National Committee on Pay Equity.

(c) In August of 2016, Massachusetts became the first state to enact a law prohibiting employers from seeking or requiring a prospective employee's wage history.

(d) Since women are paid on average lower wages than men, basing wages upon a worker's wage at a previous job only serves to perpetuate gender wage inequalities and leave families with less money to spend on food, housing, and other essential goods and services.

Id. § 9-1131(1). Finding (d)—that setting salaries based on previous employment wages perpetuates gender wage inequalities—is the central issue in this case.⁵

On April 6, 2017, the Chamber, filed a Complaint and a motion for a preliminary injunction against the City of Philadelphia and the Philadelphia Commission on Human Relations ("the PCHR") (collectively, "the City"), primarily averring that the Ordinance violates the First Amendment rights of employers. I dismissed the Chamber's original Complaint for lack of standing on May 1, 2017, allowing the Chamber to file an amended complaint. On June 13, 2017, the Chamber filed the Amended Complaint and refiled its Motion for a Preliminary Injunction ("Motion"). Following extensive briefing, I held oral argument on the Motion on February 1, 2018.⁶

LEGAL STANDARD – PRELIMINARY INJUNCTIONS IN FIRST AMENDMENT CASES

A preliminary injunction is an extraordinary remedy. Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797, 800 (3d Cir. 1989). As such, the granting of preliminary injunctive relief is restricted to limited circumstances. Id. In order to obtain a preliminary injunction, a plaintiff must establish four elements:

(1) the likelihood that the plaintiff will prevail on the merits at final hearing; (2) the extent to which the plaintiff is being irreparably harmed by the conduct complained of; (3) the extent to which the defendant will suffer irreparable harm if the preliminary injunction is issued; and (4) the public interest.

A.T. & T. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421, 1427 (3d Cir. 1994) (internal citations omitted) (quoting Merch. & Evans, Inc. v. Roosevelt Bldg. Prods., 963 F.2d 628, 632-33 (3d Cir. 1992) ). A party moving for a preliminary injunction must initially "meet the threshold for the first two ... factors," and only if these "gateway factors" are met, should the district court then consider the remaining two factors. Reilly v. City of Harrisburg, 858 F.3d 173, 178 (3d Cir. 2017), as amended (June 26, 2017). The court must then determine "in its sound discretion if all four factors, taken together, balance in favor of granting the requested preliminary relief." Id. at 179.

The United States Court of Appeals for the Third Circuit recently clarified the standard for a preliminary injunction in First Amendment cases in Reilly v. City of Harrisburg, 858 F.3d 173 (3d Cir. 2017), as amended (June 26, 2017). Typically, to obtain a preliminarily injunction, the plaintiff has the burden of demonstrating a likelihood of success on the merits. The Third Circuit explained in Reilly that in First Amendment cases, the government bears the burden of proof as to the constitutionality of a law, thus the plaintiff "must be deemed likely to prevail" unless the government demonstrates the constitutionality of the law. Id. at 180 (quoting Ashcroft v. ACLU, 542 U.S. 656, 666, 124 S.Ct. 2783, 159 L.Ed.2d 690 (2004) ). This is because " ‘the burdens at the preliminary injunction stage track the burdens at trial,’ " and for First Amendment purposes the burden of demonstrating the constitutionality of a law rests with the government. Id. (quoting Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, 546 U.S. 418, 429, 126 S.Ct. 1211, 163 L.Ed.2d 1017 (2006) ).

In light of the above, the analysis in First Amendment cases proceeds as follows. The initial burden of proving that a law restricts protected speech lies with the challenger. Id. at 180 n.5. The burden then shifts to the government to demonstrate the...