Brief Fact Summary. The city of Camden, New Jersey required that at least 40% of employees of contractors and subcontractors working on city construction projects be Camden residents. The Trade Council challenged this as a violation of the Privileges and Immunities Clause.
Synopsis of Rule of Law. The Privileges and Immunities Clause in Article IV applies to non-residents who intend to return to their domicile at the end of their journey. Under this clause, a state may not deny essential rights to a resident of another state unless there is a substantial justification for the difference in treatment. The non-resident must be shown as the “source of the evil at which the statute is aimed”.
Issue. Does the Privileges and Immunities Clause apply to municipal ordinances that limit the employees who can work on public works projects to residents of the city?
Held. Justice Rehnquist. Yes. Judgment reversed and the case remanded for a determination of the validity of the ordinance under the appropriate constitutional standard. The United States Supreme Court did not evaluate Camden’s justification on the record because there was no trial and no findings of fact.
The municipal ordinance is not outside the scope of the Privileges and Immunities Clause just because it is a municipal rather than state law. It is difficult to distinguish municipal from state action in this case because the ordinance would not have gone into effect without express approval by the State Treasurer. The challenge to the municipal law could be interpreted as a challenge to the State Treasurer’s general power. A municipality is merely a political subdivision of the state from which its authority derives. If a state cannot violate the Privileges and Immunities Clause or the Equal Protection Clause then neither can a city that derives its authority from the state. Therefore, even if there were no state funds involved, the city would still have to comport with the Privileges and Immunities Clause.
The Court has never read the Privileges and Immunities Clause so literally as to apply it only to distinctions based on state citizenship and not those based on municipal residency. The terms “citizen” and “resident” are essentially interchangeable for the purposes of analysis under the Privileges and Immunities Clause.
Although the Privileges and Immunities Clause only protects those out-of-state residents who would be injured, New Jersey citizens not residing in Camden can depend on the political process for a remedy. The ordinance is not immune from the Privileges and Immunities Clause merely because some in-state residents are similarly disadvantaged.
There is a two-step inquiry when there is discrimination against out-of-state residents. As an initial matter, the court must decide whether the ordinance burdens one of those privileges protected by the Privileges and Immunities Clause because not all forms of discrimination are constitutionally suspect. A state must treat residents and nonresidents equally only as to those privileges that bear on the vitality of the Nation as a single entity. The Privileges and Immunities Clause is not absolute and there may be times that states will discriminate against citizens of other states for a substantial reason. The relevant inquiry is whether such reasons do exist and whether the degree of discrimination bears a close relation to them. Nonresidents must somehow be the problem which the statute is aimed at.
A state’s ownership interest in a project or funds is not a controlling factor in determining whether an ordinance can be subject to the Privileges and Immunities Clause. Camden may, without fear of violating the Commerce Clause, pressure private employers engaged in public works projects to hire city residents. But the same exercise of power to bias the employment decisions of private contractors and subcontractors against out-of-state residents may be called to account under the Privileges and Immunities Clause.
The inquiry must also, of course, be conducted with due regard for the principle that the States should have considerable leeway in analyzing local evils and in prescribing appropriate cures.View Full Point of Law