R.I. Hospitality Ass'n v. City of Providence

775 F.Supp.2d 416

191 L.R.R.M. (BNA) 2330

RHODE ISLAND HOSPITALITY ASSOCIATION, PRI I, L.P., and PRI XVIII, L.P.,

v.CITY OF PROVIDENCE, by and through its Treasurer, James J. LOMBARDI III.

No. C.A. 09–527–ML.

United States District Court, D. Rhode Island.

March 31, 2011.

Dennis R. Gannon, Providence, RI, Avital R. Chatto, Jeffrey K. Techentin, Richard R. Beretta and Robert P. Brooks, Adler, Pollock & Sheehan PC, Providence, RI, for plaintiffs.Anthony F. Cottone, Providence, RI, for defendant.

Michael T. Anderson, Murphy Anderson PLLC, Boston, MA, Amata A. DeLuca, DeLuca & Weizenbaum Ltd., Providence, RI, for amici curiae.

MEMORANDUM AND ORDER

MARY M. LISI, Chief Judge.

The plaintiffs in this litigation are a Rhode Island trade group (the “Association”) related to the food service, lodging, restaurant, and tourism industry in Rhode Island,¹ and two privately held real estate investment limited partnerships organized in Delaware: PRI I, L.P. (the “Hilton”), which owns and operates the Hilton Providence, a 274 room hotel in Providence that includes “Shula's 347” restaurant; and PRI XVIII, L.P. (“The Westin”), which owns and operates The Westin Providence, a 564 room hotel that includes the “Centro” restaurant.

The plaintiffs seek to enjoin the enforcement of municipal ordinance Section 2–18.5 (the “Ordinance”), titled “Hospitality Business Protection and Worker Retention”, which was enacted by the City of Providence (the “City”) on October 21, 2010 and made retroactively effective to October 26, 2009 with respect to some, but not all, of the affected businesses. The Ordinance sets forth various requirements regarding “the retention of hospitality employees when ownership or management of hospitality businesses change.” Ordinance Preamble.

The parties have submitted an agreed statement of facts (“SOF”) and have stipulated that the Court will decide the case on its merits based on that submission. SOF, Docket No. 44; February 18, 2010 Order. Two related service worker unions, a group of hospitality employees, and several community organizations (collectively, the “ amici ”) have filed an amicus curiae brief. The Court conducted two separate hearings at which counsel for both parties and the amici supported their respective position with oral arguments and addressed questions posed by the Court.

I. Factual Background and Procedural History

An earlier version of the Ordinance (the “First Ordinance”) was enacted by the City on October 15, 2009. SOF 7. The First Ordinance applied to “any hotel or food service operation within the property of” the Dunkin' Donuts Center (“DDC”), the Rhode Island Convention Center (“RICC”), and the Veterans Memorial Auditorium (“VMA”), as well as any physically connected buildings ² “by internal walkways, skybridges, or parking lots (including streets that are closed to public traffic to facilitate parking or other functions)”, with the express exception of Providence Mall. SOF Ex. A. Pursuant to the First Ordinance, a new owner of a hospitality entity was required, inter alia, to retain qualifying employees (including certain qualifying supervisors) for a minimum period of six months; pay them a prescribed minimum wage; rehire from a preferential hiring list; and retain employees based on seniority, all subject to enforcement remedies including back pay, treble damages and attorneys fees to a prevailing employee. SOF Ex. A, First Ordinance ¶¶ (c), (e).

On November 4, 2009, the RICC Authority filed a complaint in this Court, alleging preemption under the National Labor Relations Act (“NLRA”) and Rhode Island State labor law, violations of the Contracts Clause and the Equal Protection Clause of the United States Constitution, and of the Home Rule Charter Authority. Subsequently, the Association, The Westin, and the Hilton were added as party plaintiffs, and the complaint was amended accordingly. At a Rule 16 conference, the parties agreed to submit their case for judgment on an agreed statement of facts and submitted memoranda. The amici were granted the opportunity to file an amicus curiae brief, in which they expressed their support for the Ordinance.

On June 28, 2010, the Court held the first hearing in the matter. The plaintiffs argued that the First Ordinance was subject to both Garmon ³ and Machinists⁴ preemption; that a mandated minimum wage constituted the imposition of a contractual term; that the First Ordinance imposed an obligation to bargain on a successor employer; that supervisors should be excluded under the NLRA; and that regulation of the RICC was reserved to the State.

The City, conceding that supervisors and managers should not have been included in the First Ordinance, encouraged the Court to follow the severance provision therein and to strike only any offending provision while keeping the remainder intact. The City also rejected the plaintiffs' preemption arguments and maintained that the First Ordinance merely set minimum labor standards and did not automatically impose collective bargaining obligations on a successor employer.

Within a month after the hearing, the City informed the Court that an amendment to the First Ordinance, that was “directly responsive” to some of the objections raised by the plaintiffs, had been introduced to the City Council. City's letter dated July 27, 2010. The current version of the Ordinance was enacted on October 21, 2010. Most significantly, the new version exempts the RICC from its regulation; it eliminates the minimum wage provision; it is no longer applicable to supervisors; and the period during which a successor employer must retain a predecessor's employees has been significantly shortened. SOF Ex. B, Ordinance.

After a conference with counsel for the parties, the parties stipulated to a dismissal of all claims by the RICC Authority and agreed to substitute the Association, The Westin, and the Hilton as plaintiffs. On December 9, 2010, the plaintiffs filed a second amended four-count complaint (the “Complaint”), together with an amended agreed statement of facts on behalf of the parties. In Count I, the plaintiffs seek a declaration that the Ordinance is preempted by the NLRA on the grounds that (1) the Ordinance “impermissibly interferes with the contractual relationships and ongoing negotiations which exist between The Westin and the Union,⁵ as well as those existing between the Providence Biltmore ⁶ and the Union” and (2) the Ordinance “unlawfully interferes with the collective bargaining process.” Complaint ¶¶ 41, 46. In Count II, the plaintiffs seek a declaration that the Ordinance violates the Contract Clause's prohibition against governmental interference with contractual relationships. Id. ¶ 55. In Count III, the plaintiffs seek a declaration that the Ordinance violates the Equal Protection Clause because it “impermissibly differentiates between businesses that engage in ‘hotel service’ and those that engage in every other kind of business.” Id. ¶ 59. Finally, in Count IV, the plaintiffs seek a declaration that, by enacting the Ordinance, “the City has exceeded its authority to pass laws concerning local issues.” Id. ¶ 63. The plaintiffs seek an order (1) declaring that the Ordinance is preempted by the NLRA, that it is unconstitutional, and in violation of the City's home rule charter, and (2) preliminarily and permanently enjoining enforcement of the Ordinance.

On January 18, 2011, the parties and the amici filed supplemental memoranda in support of their respective positions regarding the amended provisions in the Ordinance. The Court conducted a second hearing on March 7, 2011, after which it took the matter under advisement.

II. The Ordinance

In its preamble, the Ordinance declares that

“the wholesale displacement of employees through transfers of hotel operations in New England in the recent past has caused great public outcry, and has caused immeasurable damage to the reputation of the tourist industry in the regional economy.”

The stated purpose of the Ordinance is “to bolster Providence as a tourist destination, and to promote the stability of Providence's hospitality and tourism businesses.” Ordinance (1)(a). The Ordinance defines “Hospitality Business” as including any hotel or like facility and any “inhouse component” which supplies “sleeping or housekeeping accommodations”, “which is operating within the City of Providence with at least 25 rooms.” ⁷ In addition, the Ordinance states that “Hospitality Business covered by the October 26, 2009 Ordinance means any hotel within the property of the [DDC], the [RICC], and [VMA], or within any building physically connected” to these facilities, “with the exception of the Providence Place Mall, and any instrumentality of the State of Rhode Island, including the [RICC].” ⁸

The Ordinance is applicable to any employee of an included hospitality business who works an average of at least twenty hours per week (including part-time, on-call, on vacation, or on leave of absence) and whose employment is of at least two months duration. Ordinance (b), (c). The Ordinance applies in the event of a change in the identity of the employer at a hospitality business, defined as “any event or sequence of events (including a purchase, sale, lease, or termination of a management contract or lease) that causes, within a one-year period,⁹ the identity of the hospitality employer at a hospitality business to change.” Ordinance (b) (emphasis added).

If such an identity change occurs, the Ordinance provides:

the new employer (whether the hospitality business owner or its manager) shall retain for at least three (3) months after the commencement of operation of the hospitality business under the new hospitality business employer, those employees who were employed for at least two (2) months preceding the date on which the previous hospitality business employer's status as employer terminated. During such three-month period, employees so hired shall be employed under...