Building Owners & Managers Ass'n v. City of Pittsburgh

OPINION

This Court granted allocatur in order to determine whether the City of Pittsburgh exceeded its authority as a home rule municipality when it passed an ordinance requiring employers with new service contracts to keep the employees of the prior contractor for at least 180 days. For the reasons that follow, we hold that the City of Pittsburgh exceeded its power and violated the Home Rule Charter and Optional Plans Law, 53 Pa.C.S. § 2962(f). We affirm the order of the Commonwealth Court.

On November 30, 2004, the Pittsburgh City Council enacted the Protection of Displaced Contract Workers Ordinance (“Ordinance”) as Chapter 769 of the Pittsburgh Code.1 The Ordinance is intended to protect certain non-supervisory workers in the City of Pittsburgh who lose their jobs when their employer’s service contract is awarded to a new contractor. The Ordinance applies to contractors with five or more employees who provide janitorial, security, or building mainte*508nance services to large commercial buildings within the City of Pittsburgh.2 Pursuant to the Ordinance, any contractor that is awarded a new service contract must retain most employees of the previous contractor for a 180-day transition period.3 During the transition period, retained employees may not be terminated except for cause, which is based on performance or conduct of the particular employee.4 A contractor who violates the Ordinance is subject to fines, and displaced employees are given a private right of action to enforce the Ordinance.5

On December 7, 2005, Building Owners and Managers Association of Pittsburgh, CB Richard Ellis/Pittsburgh, L.P., Winthrop Management, L.P., 110 Gulf Associates, L.P., and Frick Lenders Associates, L.P. (“Appellees”) filed a complaint in equity and action for declaratory judgment against the City of Pittsburgh and the City Council. Appellees sought a declaration that the Ordinance was ultra vires under 53 Pa.C.S. § 2962(f). The Service Employees International Union (“SEIU”) intervened as an additional defendant on behalf of more than 1,000 janitorial workers in Pittsburgh. Appellees and SEIU then filed cross motions for judgment on the pleadings.6

On November 20, 2006, the Court of Common Pleas of Allegheny County held that the Ordinance violated 53 Pa.C.S. '§ 2962(f), granted Appellees’ motion for judgment on the pleadings, and denied SEIU’s motion. On July 19, 2007, the en bane Commonwealth Court affirmed and held that “the Ordinance at issue in the present case imposes affirmative duties on certain businesses and employers in the City of Pittsburgh.” Building Owners and Managers Ass’n of Pittsburgh v. City of Pittsburgh, 929 A.2d 267, 271 (Pa.*509Commw.2007). SEIU filed a Petition for Allowance of Appeal. On September 24, 2008, this Court granted allocatur in order to determine:

Whether the Commonwealth Court’s opinion conflicts with the Home Rule Law’s intent to liberally construe the broad powers provided to those municipalities that adopt Home Rule? More specifically, whether the Commonwealth Court erred in affirming the trial court’s ruling that “The Protection of Displaced Contract Workers Ordinance,” Pittsburgh City Code of Ordinances 22-2004, Chapter 769, Janitorial, Building Maintenance and Security Contractors (“PDCWO”) is ultra vires pursuant to 53 Pa.C.S. § 2962(f)?

Municipalities adopting a home rule charter — such as the City of Pittsburgh — are given broad authority subject to certain enumerated limitations. See 53 Pa.C.S. §§ 2961-2962.7 Section 2962(f) of the Home Rule Charter and Optional Plans Law limits a home rule municipality’s regulation of businesses and provides that:

A municipality which adopts a home rule charter shall not determine duties, responsibilities or requirements placed upon businesses, occupations and employers, including the duty to withhold, remit or report taxes or penalties levied or imposed upon them or upon persons in their employment, except as expressly provided by statutes which are applicable in every part of this Commonwealth or which are applicable to all municipalities or to a class or classes of municipalities. This subsection shall not be construed as a limitation in fixing rates of taxation on permissible subjects of taxation.

53 Pa.C.S. § 2962(f).

Appellees’ position is that the Ordinance is invalid because Section 2962(f) clearly prohibits home rule municipalities from determining “duties, responsibilities or requirements” of busi*510nesses. Appellant SEIU contends that Section 2962(f) should be read narrowly to limit a municipality from determining duties, responsibilities, and requirements already placed upon businesses by the Commonwealth of Pennsylvania. Thus SEIU argues that since a home rule municipality is intentionally given such broad powers, the only limitation properly placed upon Pittsburgh’s ability to regulate businesses is specific preemption by state law.

Based on the plain language of the statute and our review of prior case law, we hold that the Commonwealth Court correctly ruled the Ordinance invalid. Section 2962(f) prohibits home rule municipalities, like Pittsburgh, from regulating businesses by determining their “duties, responsibilities or requirements.” Pittsburgh’s Ordinance nonetheless purports to prohibit a new contractor from firing or releasing any employees from a prior contractor during a 180-day transition period.8 This is plainly a “requirement” placed upon the new contractor.

The Commonwealth Court’s decision to invalidate the Ordinance pursuant to Section 2962(f) fits squarely with that court’s previous decision in Smaller Mfrs. Council v. Council of Pittsburgh, 85 Pa.Cmwlth. 533, 485 A.2d 73 (1984).9 In Smaller, Pittsburgh passed Ordinance 21, which attempted to regulate plant workers in the Pittsburgh area. Id. at 74. Under Ordinance 21, the plant owners and operators were required to notify the Bureau of Business Security when they were planning on closing, relocating outside city limits, or reducing operations where the reduction would affect more than 15% of employees. Id. The trial court held Ordinance 21 was invalid under Section 302(d) of the Home Rule and Optional Plans Law, a substantially similar prior version of Section 2962(f), and held that Pittsburgh lacked the authority to pass the ordinance.10 Id.

*511The Commonwealth Court affirmed and held that the Ordinance was invalid because it violated the clear language of Section 302(d) since it regulated the duties, responsibilities, and requirements of the businesses. Id. at 77. Additionally, the Commonwealth Court held that based upon the clear language of Section 302(d), Ordinance 21 was prohibited unless Pittsburgh was expressly given the authority to enact such an ordinance by the legislature. Id.

Based on this reasoning, it is apparent that the Ordinance at issue here is also invalid. The Commonwealth Court invalidated a simple reporting requirement in Smaller, and the instant Ordinance is far more invasive because it forces contractors to retain certain employees for approximately half a year. The Ordinance, therefore, is a direct regulation of the contractors in violation of Section 2962(f).

However, SEIU insists that we should reevaluate the Smaller decision and that the Ordinance here is more like the ordinance upheld by the Commonwealth Court in Hartman v. City of Allentown, 880 A.2d 737 (Pa.Commw.2005).11 In Hartman, Allentown, a home rule municipality, passed an ordinance that added sexual orientation and gender identity as prohibited bases of discrimination in employment, housing, and public accommodations. Id. at 740. The trial court held that the ordinance was ultra vires because it placed duties and responsibilities on businesses in violation of Section 2962(f). Id. at 741.

On appeal, the Commonwealth Court reversed and held that the anti-discrimination ordinance did not actually require Allentown businesses to do anything; it therefore did not violate *512Section 2962(f).12 Id. at 747. The Commonwealth Court specifically held that “a narrow reading of Section 2962(f) is consistent with the Legislature’s intent.... that the phrase ‘regulation of business’ means affirmative duties being placed on businesses.”13 Id. at 746.

The Commonwealth Court further explained in Hartman that the non-discrimination ordinance is valid under Section 2962(f) because it does not impose an affirmative duty upon businesses, but rather is designed only to protect citizens from discrimination, thus distinguishing the case from Smaller and ordinances like the one at issue here. 880 A.2d at 746. The ordinance in Hartman simply disallowed discrimination based upon sexual orientation and gender identity generally, but the *513Ordinance at issue here is an affirmative and specific duty placed upon employers. By requiring employers to retain certain employees for approximately half a year, the Ordinance exemplifies the very essence of the invasive regulations that Section 2962(f) is designed to prevent and, indeed, strictly prohibits.

SEIU, along with the dissent, argues that Section 2962(f) should be interpreted to mean that Pittsburgh’s only limitation on regulating businesses is based on preemption. Dissenting-Op. at 718. Essentially, SEIU and the dissent insist that Pittsburgh is prohibited only from regulating businesses -where the Commonwealth of Pennsylvania has already chosen to regulate. However, SEIU and the dissent’s interpretation conflicts with the plain language of Section 2962(f).

We therefore reject Appellants’ position and hold that Section 2962(f) prohibits the placement of affirmative duties on employers such as those imposed by the Ordinance herein. See Bldg. Owners, 929 A.2d at 271; Smaller, supra. Compare Hartman, supra. Because the Ordinance imposes an affirmative duty upon contractors by requiring them to keep employees of prior contractors for a transitional period, the Ordinance reaches beyond the powers granted to the City of Pittsburgh as a home rule municipality in direct violation of Section 2962(f). Accordingly, we affirm the decision of the Commonwealth Court.