PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________ 

No. 10-2365

_____________

 

TRI-M GROUP, LLC

v.

THOMAS B. SHARP,

Secretary, Delaware Department of Labor,

Appellant 

_____________

Appeal from the United States District Court

for the District of Delaware

(D.C. Civil No. 1-06-cv-00556)

District Judge: Honorable Sue L. Robinson

_____________ 

Argued December 15, 2010

Before: RENDELL, HARDIMAN and VANASKIE, 

Circuit Judges.

(Opinion Filed: March 21, 2011) 

_____________
2

Linda M. Carmichael, Esq.

Jennifer D. Oliva, Esq. [ARGUED]

Department of Justice

Room 627

820 North French Street

Carvel Office Building, 6th Floor

Wilmington, DE 19801

 Counsel for Appellant

Alexander G. Bomstein, Esq.

Stephen J. Sundheim, Esq. [ARGUED]

Justin J. Williams, Esq.

Pepper Hamilton

18th & Arch Streets

3000Two Logan Square

Philadelphia, PA 19103

M. Duncan Grant, Esq.

Pepper Hamilton

1313 Market Street

Suite 5100, P.O. Box 1709

Wilmington, DE 19899

 Counsel for Appellee

_____________

OPINION OF THE COURT 

_____________

RENDELL, Circuit Judge.

In this appeal, we confront Tri-M Group, LLC‟s (“TriM”) challenge to the constitutionality of Delaware‟s 

regulatory scheme for the training and compensation of 
3

apprentices on construction projects. In the District Court, 

Tri-M sought a declaratory judgment and injunctive relief 

against enforcement of the Delaware Prevailing Wage 

Regulations (“DPWR”), 19-1000-1322 DEL. ADMIN. CODE § 

1 et seq. (2010), and the Rules and Regulations Relating to 

Delaware Apprenticeship and Training Law (“ATRR”), 19-

1000-1101 DEL. ADMIN. CODE § 1.0 et seq. (2010), alleging

that the regulations discriminated against Tri-M and other 

out-of-state contractors in violation of the negative – or

dormant – Commerce Clause. The District Court granted 

summary judgment to Tri-M, concluding that Delaware‟s 

refusal to recognize out-of-state registered apprentices

facially discriminated against out-of-state contractors without 

advancing a legitimate state interest, and this appeal followed. 

See Tri-M Group, LLC v. Sharp, 705 F. Supp. 2d 335 (D. Del. 

2010). We agree and will affirm.

Background & Procedural History

The facts of the underlying suit are undisputed. In 

response to passage of the National Apprentice Act

(“Fitzgerald Act”), 29 U.S.C. § 50 et seq., Delaware enacted 

an apprentice regulatory scheme to “develop and conduct 

employee training and registered apprenticeship programs,”

and to provide “for the establishment and furtherance of 

standards of apprenticeship and training to safeguard the 

welfare of apprentices and trainees.” 19 DEL. C. § 201.1 The 

 

1

Pursuant to the implementing regulations, a federal Bureau 

of Apprenticeship and Training may delegate authority to 

state apprenticeship agencies to register and supervise 

apprenticeship programs within the state, and may 

promulgate apprenticeship laws and regulations pertaining to 
4

Delaware Prevailing Wage Law (“PWL”), 29 DEL. C. § 6960 

et seq.,

2

provides that, for certain public works projects at 

least partially funded by the State, mechanics and laborers –

including apprentices – shall be paid a prevailing wage set by 

the Delaware Department of Labor (“DDOL”).

3

 The 

implementing Delaware Prevailing Wage Regulations 

(“DPWR”) define mechanics and laborers as “those workers 

 

the registration of apprenticeship programs. See 29 C.F.R. § 

29.

2

The PWL states:

The specifications for every contract or 

aggregate of contracts relating to a public 

works project in excess of $100,000 for new 

construction . . . or $15,000 for alteration, 

repair, renovation, rehabilitation, demolition 

or reconstruction . . . to which this State or 

any subdivision thereof is a party and for 

which the State appropriated any part of the 

funds and which requires or involves the 

employment of mechanics and/or laborers 

shall contain a provision stating the 

minimum wages to be paid various classes 

of laborers and mechanics which shall be 

based upon the wages that will be 

determined by the Delaware Department of 

Labor, to be prevailing in the county in 

which the work is to be performed.

29 DEL. C. § 6960(a).

3 DDOL is charged with administering and enforcing the 

Delaware Prevailing Wage Law. See 19 DEL. C. § 105(a)(1).
5

whose duties are manual or physical in nature, as 

distinguished from mental or managerial.” 19-1000-1322 

DEL. ADMIN. CODE § 3.1.3. Although apprentices are 

included within the definition of a mechanic, the regulations 

distinguish between the two, and define apprentices as 

“persons who are indentured and employed in a bona fide 

apprenticeship program and individually registered by the 

program sponsor with the [DDOL].” Id. §§ 3.1.3 & 3.1.4.1.1. 

The regulations further provide a detailed schedule of the 

“minimum wage progression” for registered apprentices, and 

establish that employers must pay apprentices a fraction of 

the wages earned by mechanics.

4

 19-1000-1101 DEL. ADMIN.

CODE §§ 6.2.6 & 6.2.7. The apprentice rate depends on the 

length of the project and the apprentice‟s progression, but is 

always a percentage of the mechanic‟s rate.5

Pursuant to the regulations, only a contractor that has 

registered its apprenticeship program in Delaware is eligible 

 

4

The terms “mechanic” and “journeyman” are used 

interchangeably in the Delaware laws and regulations. For 

consistency, we utilize the term “mechanic” throughout this 

opinion.

5

The applicable regulation provides that in a 2000-hour 

apprenticeship program, the minimum apprentice rate is 40% 

of the mechanic‟s rate for the first 1,000 hours, and 85% for 

the second 1,000 hours. In an 8,000-hour program, the 

minimum apprentice rate is 40% for the first 1,000 hours, and 

increases at 1,000-hour increments thereafter, with the final 

period corresponding to 85% of the mechanic‟s rate. 19-

1000-1101 DEL. ADMIN. CODE. § 6.2.7.
6

to pay the lower apprentice wage rate to registered 

apprentices. To qualify, a contractor

must be a “Delaware Resident Contractor” or 

hold and maintain a “Delaware Resident 

Business License.” The Registrant or Sponsor 

must hold and maintain a permanent place of 

business, not to include site trailers or other 

facilities serving only one contract or related 

set of contracts. To be eligible to be a 

Registrant or Sponsor, Employer/Business . . . 

must have the training program and an 

adequate number of Journeypersons to meet 

the ratio requirements as stated for that 

particular apprenticeable occupation.

19-1000-1101 DEL. ADMIN. CODE § 3.1.6 Under this rubric, 

an out-of-state contractor cannot sponsor an apprentice 

program without setting up and maintaining a permanent 

office location within Delaware.

7

 Failure to abide by these 

conditions may result in financial penalties and bar an 

 

6 A “Delaware Resident Contractor” “includes any general 

contractor . . . [or] subcontractor . . . who regularly maintains 

a place of business in Delaware. Regularly maintaining a 

place of business in Delaware does not include site trailers, 

temporary structures associated with one contract or set of 

related contracts. . . .” 19-1000-1101 DEL. ADMIN. CODE

§ 3.1

7

Prior to 1999, the pertinent Delaware regulations did not 

include a permanent place of business requirement, and Tri-M 

was a Delaware-registered sponsor with all of the benefits 

pertaining thereto. 
7

employer judicially determined to have violated the PWL 

from bidding on public construction contracts for three years. 

See 29 DEL. C. § 6960(e). In this way, the Delaware 

regulations permit in-state contractors on public works 

projects to pay a reduced apprentice rate to their Delawareregistered apprentices, while requiring out-of-state 

contractors to pay the higher mechanic‟s rate to their nonDelaware-registered apprentices.8

Appellee Tri-M is a Pennsylvania-based electrical 

contracting company that successfully bid on a sub-contract 

for electrical and building automation work at the Delaware 

State Veterans Home (“the Project”) in Milford, Delaware, 

which was funded in part by Delaware state funds.9 Tri-M 

began work on the Project in August 2005, employing 

Pennsylvania-registered apprentices and fully-trained 

mechanic professionals, but paid its employees pursuant to 

the wage rates described in the DDOL prevailing wage 

determination for their respective classifications. 

 

8

The prevailing wage rate schedules periodically published 

by DDOL explicitly state that “non-registered apprentices 

must be paid the mechanic‟s rate.” (See Appellant‟s Opening 

Br. at 9; App‟x at 366.)

9

Tri-M maintains an apprenticeship program that is 

registered with the Pennsylvania Apprenticeship and Training 

Council of the Pennsylvania Department of Labor and 

Industry (“PATC”), and its apprentice electricians are 

Pennsylvania-registered apprentices, individually registered 

with PATC pursuant to individual apprenticeship agreements.
8

On March 26, 2009, a DDOL Labor Law Enforcement 

Officer conducted an on-site inspection of the Project site. 

The officer subsequently informed Tri-M that the DDOL had 

opened a case to verify Tri-M‟s compliance with the PWL, 

and requested and timely received Tri-M‟s daily logs and 

sworn payroll reports for employees working on the Project. 

He also confirmed with the Delaware Apprenticeship and 

Training Department that Tri-M did not have an apprentice 

program registered in Delaware. This necessarily meant that 

Tri-M‟s apprentices were not Delaware-registered

apprentices. Tri-M‟s CFO inquired about registering Tri-M‟s 

apprentices in Delaware, but was informed that Delaware 

requires an apprentice program sponsor to maintain a 

permanent place of business in Delaware.10

Tri-M‟s records indicated that it paid its Pennsylvaniaregistered apprentices the Delaware-registered apprentice 

rate, rather than the mechanic‟s rate applicable to nonDelaware-registered apprentices. As a result, DDOL

informed Tri-M that it was in violation of the PWL and 

DPWR for failing to pay the applicable higher prevailing 

wage rates. Tri-M was thus required to conduct a self-audit 

and pay any wage deficiencies to the Pennsylvania-registered 

apprentices who incorrectly received the lower apprentice 

rate, instead of the higher mechanic‟s rate. Tri-M provided 

DDOL with documentation regarding its self-audit, including 

the amounts needed to bring each employee‟s pay up to the 

mechanic‟s prevailing wage rate, and timely reimbursed the 

 

10 Although Tri-M worked and maintained a site trailer in 

Delaware for many years at the AstraZeneca facility in 

Wilmington, this presence did not satisfy the residency 

requirement. See 19-1000-1101 DEL. ADMIN. CODE § 3.1.
9

six Pennsylvania-registered apprentices working on the 

Project who were not recognized as apprentices under 

Delaware law.11 

Subsequently, Tri-M brought an action for declaratory 

and injunctive relief against then-Secretary of the Delaware 

Department of Labor Thomas Sharp, alleging that DDOL 

discriminated against Tri-M and other out-of-state contractors 

by refusing to recognize their out-of-state registered 

apprentices for purposes of the PWL and DPWR. At the

conclusion of discovery, the District Court granted summary 

judgment to Tri-M, and this appeal followed.

DDOL raises three primary arguments on appeal. 

First, DDOL contends that the State‟s challenged 

procurement scheme – including the permanent place of 

business requirement – does not discriminate against 

interstate commerce, and is, therefore, not violative of the 

dormant Commerce Clause. Second, DDOL posits that the 

contested apprentice program regulations were explicitly 

authorized by Congress and approved by the United States 

Department of Labor, thus negating any conflict with the 

Commerce Clause. Finally, DDOL argues, for the first time 

on appeal, that even assuming arguendo that the challenged 

regulatory scheme is discriminatory, its attachment of 

prevailing wage conditions to State-funded public works 

contracts constitutes participation in the private market and 

does not run afoul of the dormant Commerce Clause. 

 

11 The DDOL ultimately determined that although Tri-M had 

initially violated the PWL and DPWR, the subsequent 

reimbursement brought Tri-M into compliance with the rules. 
10

Jurisdiction and Standard of Review

The District Court exercised federal subject matter 

jurisdiction over Tri-M‟s complaint pursuant to 28 U.S.C. 

§1331. Our jurisdiction arises under 28 U.S.C. ' 1291 over 

the State‟s appeal of the District Court=s grant of summary 

judgment to Tri-M. We exercise plenary review of a district 

court‟s order granting or denying summary judgment, 

applying the same standard as the district court: “Summary 

Judgment is appropriate only where, drawing all reasonable 

inferences in favor of the nonmoving party, there is no 

genuine issue as to any material fact and . . . the moving party 

is entitled to judgment as a matter of law.” Ruehl v. Viacom, 

Inc., 500 F.3d 375, 380 n.6 (3d Cir. 2007) (internal quotation 

and citation omitted).

Discussion

We are asked to decide whether Delaware‟s 

differentiated prevailing wage regulations interfere with

interstate commerce in violation of the Commerce Clause. 

See U.S. Const. art. I, § 8, cl. 3. We cannot reach this 

question, however, without first resolving DDOL‟s 

contention that the imposition of prevailing wage conditions 

upon out-of-state contractors constituted permissible market 

participation by the State within the bounds of the dormant 

Commerce Clause. This is so because “courts treat the 

question of whether the state is acting as a market participant 

as a threshold question for dormant Commerce Clause 

analysis.” United Healthcare Ins. Co. v. Davis, 602 F.3d 618, 

624 (5th Cir. 2010) (citing White v. Mass. Council of Const. 

Employ., Inc., 460 U.S. 204, 210 (1983)). “Impact on out-ofstate residents figures in the equation only after it is decided 
11

that the city is regulating the market rather than participating 

in it, for only in the former case need it be determined 

whether any burden on interstate commerce is permitted by 

the Commerce Clause.” White, 460 U.S. at 210 (emphasis 

added); see also Brooks v. Vassar, 462 F.3d 341, 355 (4th 

Cir. 2006) (“Before applying the dormant Commerce Clause 

to State activities that burden or discriminate against 

interstate commerce, a court must determine whether the 

State is acting as a market participant, rather than as a market 

regulator.”) (citation and internal quotations omitted; 

emphasis in original); J.F. Shea Co., Inc. v. City of Chicago, 

992 F.2d 745, 748 (7th Cir. 1993) (“The impact of the local 

business preference on out-of-state residents figures into the 

analysis only after it is decided that the City is regulating the 

market rather than participating in it,” and appellant cannot 

“jump[ ] to the second aspect of dormant commerce clause 

analysis without clearing the first hurdle”) (emphasis in 

original). Accordingly, we would customarily assess whether 

the market participant exception applies to Delaware‟s

regulatory scheme before deciding if the allegedly 

discriminatory rules improperly burden interstate commerce. 

See generally Atl. Coast Demolition & Recycling, Inc. v. Bd.

of Chosen Freeholders of Atl. Cnty., 48 F.3d 701, 717 (3d Cir. 

1995) (examining burden on interstate commerce after 

finding that city rules were promulgated “in its role as a 

market regulator” and are “not immune from review under the 

Commerce Clause”).

In deciding this threshold question, however, we must 

first confront a preliminary issue, namely, whether DDOL 

can avail itself of the market participant exception, having 

failed to argue to the District Court that the exception should 
12

apply.12 It is axiomatic that “„arguments asserted for the first 

time on appeal are deemed to be waived and consequently are 

not susceptible to review in this Court absent exceptional 

circumstances.‟” United States v. Petersen, 622 F.3d 196, 

202 n.4 (3d Cir. 2010) (quoting United States v. Rose, 538 

F.3d 175, 179 (3d Cir. 2008)). “This general rule serves 

several important judicial interests, protect[ing] litigants from 

unfair surprise; promot[ing] the finality of judgments and 

conserv[ing] judicial resources; and preventing district courts 

from being reversed on grounds that were never urged or 

argued before [them].” Webb v. City of Philadelphia, 562 

F.3d 256, 263 (3d Cir. 2009) (internal citations and quotations 

omitted; alterations in original).

Nonetheless, we will still address arguments raised for 

the first time on appeal in “exceptional circumstances,” and 

note that “„the matter of what questions may be taken up and 

resolved for the first time on appeal is one left primarily to 

the discretion of the courts of appeals, to be exercised on the 

facts of individual cases.‟” Council of Alter. Pol. Parties v. 

Hooks, 179 F.3d 64, 69 (3d Cir. 1999) (quoting Singleton v. 

Wulff, 428 U.S. 106, 121 (1976)); see also Selected Risks Ins. 

Co. v. Bruno, 718 F.2d 67, 69 (3d Cir. 1983) (noting that 

waiver rule “is one of discretion rather than jurisdiction”). 

Indeed, the waiver principle “is only a rule of practice and 

may be relaxed whenever the public interest or justice so 

warrants.” Franki Found. Co. v. Alger-Rau & Assoc., Inc., 

 

12 Before the District Court, DDOL urged that Congress had 

explicitly authorized the contested apprentice regulations, 

and, presumably, contemplated that no real dormant 

Commerce Clause issue actually existed. The District Court 

did not accept this argument.
13

513 F.2d 581, 586 (3d Cir. 1975); See also Barefoot 

Architect, Inc. v. Bunge, -- F.3d --, 2011 WL 121698, at *10 

(3d Cir. Jan. 14, 2011) (same); Rogers v. Larson, 563 F.2d 

617, 620 n.4 (3d Cir. 1977) (same).

13

 

We think the “public interest” weighs heavily toward 

our consideration of the market participant issue. 

Specifically, the District Court‟s decision calls into doubt the 

constitutionality of the Delaware regulatory scheme, as well 

as the public works procurement laws of approximately 37 

other states.14 The market participant doctrine impacts the 

labor and wage conditions attendant to every public works 

contract in Delaware, and invites legal challenges to the 

procurement schemes of every similarly-situated state. As 

DDOL suggests, this legal dispute entails crucial and 

unresolved issues of state sovereignty and state procurement 

 

13 See also United States v. Anthony Dell’Aquilla, Enters. & 

Subsidiaries, 150 F.3d 329, 335 (3d Cir. 1998) (noting that 

new issues raised on appeal may warrant review “when the 

public interest requires that the issue be heard or when 

manifest injustice would result from the failure to consider 

the new issue[s]”) (citation and quotations omitted; alteration 

in original).

14 We respectfully disagree with our concurring colleague‟s 

characterization of this appeal as merely involving “$10,000 

in wages Tri-M paid to six apprentices who worked on a

[completed] state-sponsored construction project.” Con. Op. 

at 1. 
14

spending, and tests the limits of the dormant Commerce 

Clause in this field.15

Moreover, the nature of the precise issue raised fits 

within the category of “exceptional circumstances” 

warranting our consideration. As we noted above, in our 

dormant Commerce Clause jurisprudence, the alleged burden 

on interstate commerce is generally evaluated “only after” it 

is decided that a state is regulating, rather than participating, 

in a market. White, 460 U.S. at 210. The market participant 

determination is a “threshold question for dormant Commerce 

Clause analysis,” Davis, 602 F.3d at 624, because “the 

strictures of the dormant Commerce Clause are not activated 

unless a state action may be characterized as a „regulation,‟” 

SSC Corp. v. Town of Smithtown, 66 F.3d 502, 510 (2d Cir. 

1995). Accordingly, a court should not turn a blind eye to the 

fact that a state cannot be held to have improperly 

discriminated against interstate commerce – as was found in 

 

15 Most recently, we found the fact that “we have not yet 

addressed the issue raised” to itself constitute “an institutional 

consideration that can be viewed as „an exceptional 

circumstance‟” under the “public interest” prong of the 

analysis. United States v. Petersen, 622 F.3d 196, 202 n.4 (3d 

Cir. 2010) (reviewing a rare procedural posture whereby a 

jury charge was offered by the trial court, but refused by the 

defendant) (emphasis added). Despite the importance and 

novelty of the issues implicated by the market participant 

doctrine, our last decision in the field was issued in 1995. 

Under Petersen, this itself constitutes an “institutional 

consideration” warranting timely review.
15

this case – if it was behaving as a market participant, rather 

than a market regulator. 

We have previously stated that an argument omitted 

before the district court may nevertheless be considered 

where it “is closely related to arguments that [the parties] did 

raise in that court.” Bagot v. Ashcroft, 398 F.3d 252, 256 (3d 

Cir. 2005). Most recently, we declined to apply the waiver 

rule formalistically where a party neglected to adequately 

press a claim under Restatement (Second) of Torts § 766A

before the district court, having urged instead an unsuccessful 

argument based on the related § 766.16 Bunge, -- F.3d --, 

2011 WL 121698, at *10. Noting the interrelated nature of 

the separate sections, we excused the defendant‟s invocation 

of “the wrong definition of the tort,” and decided the § 766A 

issue. Id. Similarly here, we cannot conclude that the 

intertwined market participant aspect of the dormant 

Commerce Clause analysis was waived in a manner that 

precludes us from ascertaining whether the regulations at 

issue constitute permissible market participation or 

unconstitutional discrimination.

Moreover, as in Bunge, from a public policy 

standpoint, we think “[t]he public interest is better served by 

 

16 Both sections address the tort of intentional interference 

with another‟s performance of a contract, but § 766A lacks as 

an element the requirement of a failure to perform; as a result, 

§ 776A favored the appellant in Bunge, whereas § 766 did 

not. 2011 WL 121698, at *9. We relaxed the waiver rule and 

found the new argument under § 766A determinative to the 

resolution of the issue in appellant‟s favor requiring reversal, 

unlike here, where we are affirming the District Court.
16

addressing [this issue] than by ignoring it.” Id. In its most 

recent decision concerning the dormant Commerce Clause, 

the Supreme Court observed that it granted certiorari to 

address a legal decision that “cast[ ] constitutional doubt on a 

tax regime adopted by a majority of the States,” finding the 

matter “raised [ ] an important question of constitutional 

law.” Dep’t of Rev. v. Davis, 553 U.S. 328, 337 (2008). 

Similarly, the instant appeal “casts constitutional doubt” upon 

a state procurement scheme “adopted by a majority of the 

States,” and presents a weighty question of public concern.

Furthermore, application of waiver is not compelled by

the primary prudential aims of the waiver rule. “The waiver 

rule applies with greatest force „where the timely raising of 

the issue would have permitted the parties to develop a 

factual record.‟” Id. (citation omitted). Accordingly, “we 

have been reluctant to apply the waiver doctrine when only an 

issue of law is raised” and no additional fact-finding is 

necessary. Huber v. Taylor, 469 F.3d 67, 74 (3d Cir. 2006); 

see also Hooks, 179 F.3d at 69 (exercising discretion to 

address a new argument where the “issue involved . . . 

concerns a pure question of law, and in the interest of 

avoiding further delay”). “The waiver rule serves two 

purposes: ensuring that the necessary evidentiary 

development occurs in the trial court, and preventing surprise 

to the parties when a case is decided on some basis on which 

they have not presented argument.” Bunge, -- F.3d --, 2011 

WL 121698, at *10. 

Neither party disputes the District Court‟s factual 

findings, nor does either party suggest that further 

development of the record at the District Court level would 

assist resolution of this matter. Therefore, we are confronted 
17

solely with a pure question of law as to the applicability of 

the market participant exception.17 See Huber, 469 F.3d at 75 

(“[W]e are less inclined to find a waiver when the parties 

have had the opportunity to offer all the relevant evidence.”). 

Furthermore, the litigants were afforded ample opportunity to 

present and develop their legal theories and arguments on the 

issue, obviating any plausible claim of unfair surprise or 

prejudice.18

Finally, the judicial interests highlighted by Webb as 

further justification for the general waiver principle are not 

undermined by our decision to consider the market participant 

exception here. See supra. Specifically, by resolving this 

purely legal question without further unnecessary proceedings 

before the district court, we will “conserve judicial 

resources.” Additionally, because we adopt the District 

Court‟s dormant Commerce Clause analysis, and are not 

basing our decision on the market participant exception as 

such, we are not ruling “on grounds that were never urged or 

argued.” Id.

 

17 In the dormant Commerce Clause context specifically, we 

previously declined a request to remand a government 

agency‟s new arguments to the district court because “the 

facts [were] not in dispute” and the “public interest [was] 

sufficiently implicated [ ] to require resolution” of the new 

issues. Appalachian States Low-Level Radioactive Waste 

Com’n v. Pena, 126 F.3d 193, 196 (3d Cir. 1997).

18 Notably, Tri-M does not actually assert in its briefing that 

our resolution of the market participant question would be 

prejudicial or unfair.
18

At bottom, because the parties have fully developed 

their arguments on appeal and this aspect of the dormant 

Commerce Clause challenge before us sufficiently implicates 

the public interest, it is appropriate for us to resolve whether 

the market participant exception applies.

I. Market Participant Exception

Accordingly, we will first address DDOL‟s claim that

in regulating the prevailing wages and imposing the

permanent place of business requirement, Delaware acted as a 

mere participant in the market.

A.

The Commerce Clause of the United States 

Constitution grants Congress plenary authority to regulate 

commerce among the states, and “has long been understood 

to have a „negative‟ aspect that denies the States the power 

unjustifiably to discriminate against or burden the interstate 

flow of articles of commerce.” Oregon Waste Sys., Inc. v. 

Dep’t of Envtl. Quality of Or., 511 U.S. 93, 98 (1994). Where 

a state restriction discriminates against interstate commerce 

by providing “differential treatment of in-state and out-ofstate economic interests that benefits the former and burdens 

the latter,” it is virtually per se invalid in all but the narrowest 

circumstances. Granholm v. Heald, 544 U.S. 460, 472 (2005) 

(quoting Oregon Waste, 511 U.S. at 99). Pursuant to negative 

or dormant Commerce Clause jurisprudence, a discriminatory 

state law “will survive only if it „advances a legitimate local 

purpose that cannot be adequately served by reasonable 

nondiscriminatory alternatives.‟” Davis, 553 U.S. at 338

(quoting Oregon Waste, 511 U.S. at 101). 
19

“Some cases run a different course, however, and an 

exception covers States that go beyond regulation and 

themselves „participat[e] in the market.‟” Id. at 339 (quoting 

Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810 (1976)) 

(alterations in original). “Nothing in the purposes animating 

the Commerce Clause prohibits a State, in the absence of 

congressional action, from participating in the market and 

exercising the right to favor its own citizens over others.” 

Alexandria Scrap, 426 U.S. at 810; see also Atl. Coast, 48 

F.3d at 715 (recognizing “exception from the restraints of the 

dormant Commerce Clause for otherwise discriminatory 

action taken by a governmental entity in its role as a market 

participant”). Therefore, “when a state or local government 

enters the market as a participant it is not subject to the 

restraints of the Commerce Clause,” and our “single inquiry” 

is limited to ascertaining “„whether the challenged program 

constituted direct state participation in the market.‟” White, 

460 U.S. at 208 (quoting Alexandria Scrap, 426 U.S. at 436 

n.7).19

In practice, the Supreme Court has found a state or 

municipality to act as a market participant where “the 

government was participating directly in some aspect of the 

market as a purchaser, seller, or producer, and the alleged 

 

19 The Court further emphasized that since “state proprietary 

activities may be, and often are, burdened with the same 

restrictions imposed on private market participants,” 

“[e]venhandedness suggests that, when acting as proprietors, 

States should similarly share existing freedoms from federal 

constraints, including the inherent limits of the Commerce 

Clause.” White, 460 U.S. at 207 n.3.
20

discriminatory effects on the interstate market flowed from 

these market actions.” Atl. Coast, 48 F.3d at 716. The 

exception was initially described in Alexandria Scrap. 426 

U.S. at 797. There, the Supreme Court upheld a Maryland 

statute that, in an effort to remove abandoned automobiles 

from the State‟s roads, promised a cash “bounty” to scrap 

processors licensed by the state for the destruction of any 

vehicle previously titled in Maryland, while denying a similar 

payment to out-of-state processors. Id. at 797, 801. The 

Court found that Maryland had “entered into the market itself 

to bid up the[ ] price . . . as a purchaser,” and was a market 

participant behaving as a private actor. Id. at 809. Several 

years later, the Court reaffirmed the distinction between 

market participant and market regulator in Reeves, Inc. v. 

Stake, sustaining South Dakota‟s decision to confine sales of 

cement by a state-owned and -operated cement plant to state 

residents during a cement shortage. 447 U.S. 429, 431-32, 

438 (1980) (emphasizing that a state conducting business as a 

private actor may “exercise [its] own independent discretion 

as to parties with whom [it] will deal,” and may preference 

in-state interests.) 

Similarly, in White, the Supreme Court again applied 

the market participant exception in upholding a mayor‟s 

executive order that required every construction project 

funded in part by city funds to be performed by a work force 

of at least 50% city residents. 460 U.S. at 205, 208. The 

Court observed that the city participated in the market by 

“expend[ing] its own funds in entering into construction 

contracts for public projects,” but cautioned that “some limits 

on a state or local government‟s ability to impose restrictions 

that reach beyond the immediate parties with which the 

government transacts business” must exist. Id. at 211. The 
21

Court declined to define those limits, however, because 

“everyone affected by the order [was], in a substantial if 

informal sense, working for the city.‟” Id. at 214-15 (internal 

citations omitted).20

Our own jurisprudence reflects limited opportunity to 

opine regarding the exception. In Swin Resources Systems, 

Inc. v. Lycoming County, Pa., we upheld a county‟s decision 

to charge a preferential rate for reception and disposal of 

waste generated within the county as compared to waste 

generated outside the vicinity. 883 F.2d 245, 246 (3d Cir. 

1989). Analogizing to Alexandria Scrap, Reeves, and White, 

we noted that the pricing scheme did not affect prices outside 

the direct transactions and reflected permissible restrictions 

by a market participant upon those it dealt with directly in the 

marketplace. Id. The subsequent year, in Trojan 

Technologies v. Pennsylvania, we approved a State 

procurement law that required all political subdivisions to 

purchase only American-made steel products. 916 F.2d 903, 

904-05 (3d Cir. 1990). We noted that, “[a]s the ultimately 

controlling public purchaser, the Commonwealth enjoys the 

same right to specify to its suppliers the source of steel to be 

 

20 The Supreme Court declined to extend the doctrine, 

however, in South-Central Timber Development, Inc. v. 

Wunnicke, finding that an Alaska statute conditioning the sale 

of state timber to private purchasers upon agreement to 

process the timber within the State represented impermissible 

“downstream regulation.” 467 U.S. 82, 98-99. The Court 

observed that “although the State may be a participant in the 

timber market, it is using its leverage in that market to exert a 

regulatory effect in the processing market, in which it is not a 

participant.” Id.
22

used in any supplies provided as is enjoyed by similarly 

situated private purchasers.” Id.

We declined to apply the market participant exception, 

however, to a state law that permitted state agencies to 

establish solid waste districts that controlled the flow of all 

waste within the district to designated disposal facilities

within and outside the district and state. Atl. Coast, 48 F.3d 

at 706-07. We determined that the disposal site designation 

criteria extended beyond private participation, and, in fact,

controlled the conduct of private parties in the market:

When a public entity participates in a market, it 

may sell and buy what it chooses, to or from 

whom it chooses, on terms of its choice; its 

market participation does not, however, confer 

upon it the right to use its regulatory power to 

control the actions of others in that market.

Id. at 717. Because the regulations did not “merely determine 

the manner or conditions under which the government will 

provide a service, [and] require[d] all participants in the 

market to purchase the government service,” the state‟s 

conduct did not fall within the market participant exception.

21

 

 

21 Several of our fellow Courts of Appeals have likewise 

found the market participant exception inapplicable in 

comparable instances where a municipality‟s participation in 

a market effected concurrent regulation of private parties in 

that market. See, e.g. Waste Mgmt. Holdgs., Inc. v. Gilmore, 

252 F.3d 316, 345 (4th Cir. 2001) (finding that Virginia “was 

not acting as a private participant in the waste disposal 

market” by regulating the conduct of others in that market) 
23

Id.; see also United Haulers Ass’n, Inc. v. Oneida-Herkimer 

Solid Waste Mgmt. Auth., 438 F.3d 150, 158 (2d Cir. 2006) 

(“[I]t is well settled that a state may act as a market 

participant with respect to one portion of a program while 

operating as a market regulator in implementing another.”) 

(citing USA Recycling, 66 F.3d at 1283).

More recently, we had occasion to consider the 

“regulator/market-participant distinction” in the context of 

federal preemption under the National Labor Relations Act 

(“NLRA”), 29 U.S.C. § 151 et seq., where a municipality 

conditioned financing upon the borrower‟s agreement to a 

labor neutrality agreement. Hotel Empls. & Rest. Empls. 

Union, Local 57 v. Sage Hospitality Res., LLC, 390 F.3d 206, 

215 (3d Cir. 2004).22 There, we observed that “whether a 

 

(citation omitted); USA Recycling, Inc. v. Town of Babylon, 

66 F.3d 1272, 1282 (2d Cir. 1995) (“[S]tates and local 

governments do not enjoy carte blanche to regulate a market 

simply because they also participate in that market.”).

22 Although this line of cases involves preemption analysis 

under the NLRA and other federal statutes, the Supreme 

Court‟s discussion of the market participant exception in this 

context relies upon and conforms with its dormant Commerce 

Clause jurisprudence, and is instructive. See, e.g., Engine 

Mfrs. Ass’n v. So. Coast Air Quality Mgmt. Dist., 498 F.3d 

1031, 1040 (9th Cir. 2007) (“After the development of the 

market participant doctrine in [ ] dormant Commerce Clause 

cases, the Supreme Court . . . [has] applied the doctrine to 

protect proprietary state action from preemption by various 

federal statutes.”); Cardinal Towing & Auto Repair, Inc. v. 

City of Bedford, Tx., 180 F.3d 686, 691 (5th Cir. 1999) 
24

government‟s condition of funding constitutes market 

participation . . . depends upon the following two step test: 

First, does the challenged funding condition serve to advance 

or preserve the state‟s proprietary interest in a project or 

transaction, as an investor, owner, or financier? Second, is 

the scope of the funding condition „specifically tailored‟ to 

the proprietary interest?” Id. at 215-16 (citing Bldg. &

Constr. Trades Council v. Assoc. Builders & Contr. of 

Mass./R.I., Inc. (“Boston Harbor”), 507 U.S. 218, 232 

(1993)).23 We emphasized that the “mere fact that 

 

(noting that the market participant exception originating in 

dormant Commerce Clause analysis “has been recognized in 

preemption cases”); Metro. Taxicab Bd. of Trade v. City of 

New York, No. 08 Civ. 7837, 2008 WL 4866021, at *7 

(S.D.N.Y. Oct. 31, 2008) (“The market participant doctrine is 

an extension of a principle from the Commerce Clause . . . 

and has been extended to preemption jurisprudence”) (citing 

Alexandria Scrap, 426 U.S. at 810).

23 In Boston Harbor, the Supreme Court found that the NLRA 

did not preempt a bid specification by a Massachusetts 

agency requiring bidders to abide by a certain labor 

agreement because the government was acting as a market 

participant, rather than regulating labor-management 

relations. 507 U.S. at 229 (explaining that preemption 

doctrines apply only to state regulation). The Court 

emphasized that the cleanup project targeted by the relevant 

specification constituted market participation since it was 

“specifically tailored to one particular job” to ensure “an 

efficient project that would be completed as quickly and 

effectively as possible at the lowest cost.” Id. In effect, the 

state was acting “with no interest in setting policy.” Id.
25

government affects labor relations by imposing conditions 

under its power to procure or to spend does not automatically 

mean that the state is acting in a propriety capacity” as a 

market participant. Id. at 213. Finding that the city‟s 

insistence upon a no-strike agreement did not “sweep[ ] more 

broadly than [ ] a government agency‟s proprietary economic 

interest,” we concluded that the funding condition was 

“specifically tailored to protect its proprietary interest in the 

value” of the implicated property, and was narrowly tailored

only to projects receiving the funds. Id. at 217-18.

Notably, this reasoning squares with the Supreme 

Court‟s most recent pronouncement in the field. In Chamber 

of Commerce of the U.S.A. v. Brown, the Supreme Court 

declined to find market participation in the preemption 

context where a California statute imposing a targeted 

negative restriction on employer speech was neither 

“„specifically tailored to one particular job,‟ nor a „legitimate 

response to state procurement constraints or to local 

economic needs.‟” 554 U.S. 60, 70 (2008) (quoting Wisc. 

Dep’t of Ind., Labor & Human Relations v. Gould Inc., 475 

U.S. 282, 291 (1986)). Where the “legislative purpose is not 

the efficient procurement of goods and services, but the 

furtherance of a labor policy,” a state actor is behaving “in its 

capacity as a regulator rather than a market participant.” Id.

B.

From the foregoing, we can glean several questions a 

court should ask when conducting the “single inquiry” of 

determining “whether the challenged program constitute[s] 

direct state participation in the market,” or market regulation. 

White, 460 U.S. at 208. Is the regulation limited to a job or 
26

contract in which a governmental entity is engaged? Is the 

action designed merely to protect or advance a specific 

proprietary interest? Is it tailored to that interest? Does the 

government‟s involvement affect only those with whom the 

entity is dealing in the market, or does it impact others or set 

broad policies? In reaching the answer, the Court “must 

consider in each specific context if the government is acting 

like a private business or a governmental entity.”24 Selevan v. 

N.Y. Thruway Auth., 584 F.3d 82, 93 (2d Cir. 2009).

Here, DDOL urges that Delaware‟s attachment of its 

prevailing wage conditions to State-funded public works 

contracts is analogous to a private party‟s attaching labor 

conditions to private market transactions, and that the State‟s 

desire to advance policy interests does not preclude the 

application of the market participant doctrine. Were this an 

accurate characterization of the state‟s conduct – i.e., merely 

attaching conditions to private market transactions – we 

would agree. But it is not. There is nothing in the regulations 

that could be deemed tailored or targeted to a specific 

proprietary interest; the conditions do not attach to a specific 

job or contract in which the government is engaged. To the 

contrary, unlike the factual circumstances considered by the 

Supreme Court in Alexandria Scrap, Reeves, and White, and 

by our own Court in Swin and Trojan, the disputed prevailing 

 

24 In this regard, we observed in Swin that “application of the 

distinction between „market participant‟ and „market 

regulator‟ has [ ] occasioned considerable dispute in the 

Supreme Court‟s jurisprudence,” with the “author of each of 

the three opinions that applied the doctrine [Hughes, White, 

and Reeves] . . . author[ing] a dissent in the next.” 883 F.2d 

at 249.
27

wage conditions here are part of an expansive regulatory 

scheme that controls the market activities of private 

participants; this involvement clearly reflects a governmental

interest in setting labor policy, rather than merely impacting 

the state‟s own participation in the market.

As an initial matter, the apprenticeship regulations

sweep broadly. They are not limited in scope only to 

contracts in which the state directly participates in a funding 

or procurement capacity. As DDOL conceded in its briefing

and at oral argument, the ATRR do not refer exclusively to 

public contracts, and they actually regulate Delaware-resident 

sponsors in the private contractual market for labor. (See

Appellant‟s Reply Br. at 22.) Specifically, once a contractor 

becomes a Delaware-registered apprenticeship program 

sponsor, it must adhere to the apprentice prevailing wage 

rates and training requirements regardless of whether the

contractor is thereafter performing labor on a public or private 

contract. (Id. at 22-23; Appellant‟s Opening Br. at 29-30.) In 

this context, DDOL expressly conceded that it was 

“regulating apprentice labor (rather than acting as a market 

participant).” (Appellant‟s Reply Br. at 22-23.) 

This admission followed DDOL‟s earlier concession 

before the District Court that DDOL‟s ability to monitor and 

inspect apprenticeship program resident sponsors – through 

on-site visits – and to enforce the apprenticeship wage and 

training requirements was “not limited to public works 

projects,” and could potentially extend to private projects 

outside Delaware.25 (See Sharp‟s Opening Br. in Support of 

 

25 Under this rubric, if, as the Delaware rules currently 

provide, an out-of-state contractor establishes a permanent 

place of business and becomes a registered sponsor in order 
28

Mot. for Sum. Judg. at 22.) In this regard, “the funding 

condition [is not] „specifically tailored‟ to the proprietary 

interest,” and Delaware is not so much participating in the 

market as it is regulating the market as a whole. Hotel 

Empls., 390 F.3d at 215.

In Wyoming v. Oklahoma, 502 U.S. 437, 456 (1992), 

the Supreme Court invalidated a state statute that required all 

Oklahoma electricity plants to use at least 10% Oklahoma 

coal. Although the Court acknowledged that the state was 

participating in the market by purchasing coal for its own 

plant, the Court found the market participant exception 

inapplicable because the law also regulated the purchasing 

behavior of private plants. Id.; see also SSC Corp. v. Town of 

Smithtown, 66 F.3d 502, 513 (2d Cir. 1995) (discussing 

Wyoming, and noting that “simply because Oklahoma was in 

one respect a „participant‟ in the coal market did not mean 

that in all respects its activity affecting the coal market 

constituted „market participation‟”) (emphasis in original). 

As in Wyoming, while DDOL may at times participate in the 

market by directly procuring labor for public works projects, 

it also regulates the apprentice wages and apprenticeship 

 

to compete on a level playing field with Delaware 

contractors, the out-of-state contractor would become subject 

to all of DDOL‟s regulations, including the prevailing wage 

regulations governing compensation and training of 

apprentices in private contracts. Therefore, unless the out-ofstate contractor is willing to establish a permanent place of 

business solely to service public works contracts and then to 

exit Delaware to bid on private contracts, the existing rules 

would also regulate the private contracts entered into by outof-state contractors regardless of their situs.
29

programs implemented by registered sponsors regardless of 

whether such sponsors are performing on private contracts 

devoid of the State‟s direct involvement as a “purchaser, 

seller, or producer.” See Atl. Coast, 48 F.3d at 717. In this 

respect, the prevailing wage conditions at issue exceed the 

bounds of the State‟s direct participation and affect the 

purchasing behavior of private parties. As such, the 

regulatory scheme “confer[s] upon [DDOL] the right to use 

its regulatory power to control the actions of others in [the] 

market,” and “w[as] thus promulgated by [Delaware] in its 

role as a market regulator, not in its capacity as a market 

participant.” Id. 

The expansive scope of Delaware‟s regulations also

distinguishes the case before us from the previously discussed 

market participation cases, and, in particular, from White, the 

broadest of the decisions. “The city order at issue in White

included the workforce restriction in the city‟s notice for bids, 

so the contracting company was aware of the condition if it 

decided to bid and could elect not to participate in a sale 

under that requirement.” GSW, Inc. v. Long County, Ga., 999 

F.2d 1508, 1515 (11th Cir. 1993) (discussing White, 460 U.S. 

at 206). In this respect, the city was operating much like a 

private entity in providing specific conditions within 

individual bid proposals. By contrast, the Delaware PWL and 

ATRR are untethered from any specific spending or 

procurement project, and apply not just to public works 

contracts; they also dictate the wage and employment terms 

of a registered sponsor‟s apprenticeship program regardless of 

the State‟s involvement with a particular construction project. 

As the Fifth Circuit recently observed, “a state cannot 

regulate others in the market in which it participates; the 

[market participant] doctrine only protects the state‟s 
30

participation itself.” United Healthcare, 602 F.3d at 625. 

Here, DDOL‟s involvement with the market extends beyond 

state participation.

Several cases addressing comparable prevailing wage 

laws of other states bolster this conclusion. In addressing the 

Pennsylvania Prevailing Wage Act, 43 PA. CONST. STAT. § 

165-1 et seq. (2009), we previously observed in the 

preemption context that Pennsylvania was “clearly acting 

with an „interest in setting policy,‟ not as a proprietor,” in 

enacting and applying the statute. Keystone Chapter, Assoc. 

Builders & Contractors, Inc. v. Foley, 37 F.3d 945, 955 n.15 

(3d Cir. 1994) (quoting Boston Harbor, 507 U.S. at 229). 

“The Prevailing Wage Act aims to ensure that workers 

receive adequate wages, a governmental objective.” Id. 

Accordingly, it “would be difficult for the state to claim it is 

acting as a private market participant when it is making rules 

that raise the cost of its contracts.” Id. We concluded in that 

decision that the state‟s interest in establishing labor 

standards and wages constituted an exercise of the State‟s 

traditional police power, not market participation. Id.

In an analogous decision, the Ninth Circuit addressed 

the payment of prevailing wages pursuant to California‟s 

apprenticeship regulations, observing:

The State did not merely create apprenticeship 

standards in its contract with [Plaintiff] nor 

were the apprenticeship standards in this case 

created based upon unique needs that the 

detention facility project presented. The 

apprentice prevailing wage law applies 

uniformly to all public works contracts executed 
31

in the State of California and is a mechanism 

through which the State regulates 

apprenticeship programs and the 

employment of apprentices on public works 

projects. As this court has stated previously: 

“The state‟s involvement does not end with the 

awarding of the contract. Section 1777.5 is 

aimed at regulating contractors who work on 

public contracts.”

Dillingham Constr. N.A., Inc. v. County of Sonoma, 190 F.3d 

1034, 1038 (9th Cir. 1999) (citation omitted) (emphasis 

added). Consequently, the Ninth Circuit found the 

apprenticeship prevailing wage law to constitute “state 

regulation” of public works projects, rather than market 

participation. Id.

As in the latter cases, identical governmental 

objectives underlie the enactment of the Delaware Prevailing 

Wage regulations here. See 19-1000-1101 DEL. ADMIN.

CODE § 1.2 (“The purpose of this chapter is to set forth labor 

standards to safeguard the welfare of Apprentices . . . .”); id. § 

2.1.2 (“Provide for the establishment and furtherance of 

Standards of Apprenticeship and Training to safeguard the 

welfare of Apprentices and trainees.”). As in Dillingham, 

Delaware‟s permanent place of business requirement was not 

enacted for purposes of a specific project or to service unique 

needs; as in Keystone, the instant regime raises the cost of the 

State‟s contracts with the primary purpose of advancing the 

State‟s interest in improving apprentice working conditions

on all contracts. See Dillingham, 190 F.3d at 1038; Keystone, 

37 F.3d at 955 n.15. Moreover, the regulations diverge from

the Supreme Court‟s most recent pronouncement that funding 
32

conditions in procurement agreements should be “specifically 

tailored to one particular job” to qualify as market 

participation. Brown, 554 U.S. at 70; see also Hotel Empls., 

390 F.3d at 215-16 (same). Here, the “legislative purpose is 

not the efficient procurement of goods and services, but the 

furtherance of a labor policy,” namely, the setting of 

standards for training and payment of apprentices in public 

and private contracts alike.26 See Brown, 554 U.S. at 70. 

Another factor distinguishes the instant statutory 

regime from those that reflect mere market participation by 

private actors: the potential civil penalty threatened by the 

State for failure to comply with the prevailing wage 

conditions. The Delaware Code provides that “any employer 

who knowingly fails [ ] to pay the prevailing wage rates 

provided for under this section . . . shall, for each such 

violation, be subject to a civil penalty of not less than $1,000 

nor more than $5,000 for each violation.” 29 DEL. C. § 

6960(e). Additionally, as the District Court noted, the PWL 

grants DDOL the right to revoke “the ability of a penalized 

employer to bid on future public construction contracts.” Id. 

In this instance, DDOL directly threatened Tri-M with a 

forthcoming civil penalty for failure to conform its 

reimbursement of non-Delaware-registered apprentices to the 

 

26 DDOL‟s separate argument that Tri-M is ineligible for 

Delaware sponsor registration because it “voluntarily chose[ ] 

not to subject [its] apprenticeship program to DDOL 

oversight and regulation” further confirms that DDOL‟s role 

in enforcing the apprenticeship standards extends beyond 

participation in a discrete procurement contract, and entails 

regulation of a contractor‟s entire apprenticeship program. 

(See Appellant‟s Opening Br. at 29.)
33

ATRR prevailing wages. (See App‟x at 451 (May 9, 2006 

Letter from Nelson to Tri-M).)

“A governmental entity acts as a market regulator

when it employs tools in pursuit of compliance that no private 

actor could wield, such as the threat of civil fines . . . .” 

United Haulers, 438 F.3d at 157 (citing SSC Corp., 66 F.3d at

513) (emphasis added). In addressing the “regulator/marketparticipant distinction,” we have noted with approval a Ninth 

Circuit decision that found, inter alia, the inclusion of a civil 

penalties provision in a state statute as indicative that the 

section constituted a regulatory measure outside the bounds 

of the market participant exception. Hotel Empls., 390 F.3d 

at 215 (discussing United States v. Lockyer, 364 F.3d 1154, 

1163 (9th Cir. 2004)); see also Incorp. Vil. of Rockville

Centre v. Town of Hempstead, 196 F.3d 395, 399 (2d Cir. 

1999) (“[W]hen the state avails itself of the unique powers or 

special leverage it enjoys by virtue of its status as sovereign, 

it is „engaging in market regulation.‟”) (citation omitted). 

Where the state relies on its coercive power to effectuate 

compliance with contractual provisions, it distinguishes itself 

from a truly private actor, which must rely on contractual 

remedies to remedy breaches. Correspondingly, Delaware‟s 

ability to impose civil penalties upon out-of-state contractors

for failure to pay the higher mechanic prevailing wage to

unregistered apprentices confirms that its role is not merely 

that of a market participant.

Finally, we are guided by the Supreme Court‟s recent 

reminder of a central theme running through its market 

participation jurisprudence; one that is noticeably absent here:
34

In each of the [market participation] cases the 

commercial activities by the governments and 

their regulatory efforts complemented each 

other in some way, and in each of them the fact 

of tying the regulation to the public object of 

the foray into the market was understood to give 

the regulation a civic objective different from 

the discrimination traditionally held to be 

unlawful: in the paradigm of unconstitutional 

discrimination the law chills interstate activity 

by creating a commercial advantage for 

goods or services marketed by local private 

actors, not by governments and those they 

employ to fulfill their civic objectives.

Davis, 553 U.S. at 347 (emphasis added). Unlike the 

important civic considerations that animated the

governmental favoritism in other cases – unemployment and 

disenfranchisement in White, limited natural resources in 

Reeves, or environmental pollution in Alexandria Scrap –

DDOL‟s “civic objective” in crafting the permanent place of 

business requirement here was protectionist – or retaliatory –

in nature. See infra; see also Tri-M Group, 705 F. Supp. 2d at

345-46 (summarizing testimonial evidence showing that 

Delaware‟s permanent place of business requirement was

enacted to retaliate against Pennsylvania for failing to 

recognize Delaware-registered apprentices). Indeed, the 

regulatory scheme here appears to fall “within the forbidden 

paradigm” precisely because the state‟s participation creates 

“a commercial advantage for goods or services marketed by 

local private actors.” Davis, 553 U.S. at 348.
35

Despite its legitimate and considerable investment in 

procurement, DDOL acted as a market regulator in 

promulgating expansive labor regulations that control 

apprenticeship training and wage scales for all apprenticeship 

program sponsors, regardless of the State‟s direct 

participation in the market. Accordingly, the PWL and 

ATRR are subject to review for potentially imposing an 

undue burden on interstate commerce in contravention of the 

dormant Commerce Clause. See White, 460 U.S. at 210.

II. Dormant Commerce Clause Review

The dormant Commerce Clause “prohibits the states 

from imposing restrictions that benefit in-state economic 

interests at out-of-state interests‟ expense, thus reinforcing 

„the principle of the unitary national market.‟” CloverlandGreen Spring Dairies, Inc. v. Pa. Milk Mktg. Bd., 298 F.3d 

201, 210 (3d Cir. 2002) (“Cloverland I”) (quoting West Lynn 

Creamery, Inc. v. Healy, 512 U.S. 186, 192-93 (1994)).

27

 

States “cannot impede free market forces to shield in-state 

businesses from out-of-state competition,” and, notably, 

“state laws that discriminate against out-of-state businesses 

by forcing them to „surrender whatever competitive 

advantages they may possess‟ are especially suspect.” 

Cloverland I, 298 F.3d at 210 (quoting Brown-Forman 

Distillers Corp. v. New York State Liquor Auth., 476 U.S. 

 

27See also Granholm, 544 U.S. at 472 (“This mandate 

„reflect[s] a central concern of the Framers that . . . in order to 

succeed, the new Union would have to avoid the tendencies 

toward economic Balkanization that had plagued relations 

among the Colonies and later among the States under the 

Articles of Confederation.”).
36

573, 580 (1986)).

To decide that Delaware‟s permanent place of business 

requirement violates the dormant Commerce Clause, we must 

first assess “whether the state regulation at issue discriminates 

against interstate commerce „either on its face or in practical 

effect.‟” Id. (quoting Maine v. Taylor, 477 U.S. 131, 138 

(1986)); see also Am. Trucking Ass’n, Inc. v. Whitman, 437 

F.3d 313, 319 (3d Cir. 2006) (“[T]he level of scrutiny to be 

applied . . . is contingent upon whether the court finds that the 

statute or regulation is discriminatory”).28 Where a regulation 

discriminates against interstate commerce in favor of local 

business, such protectionism “is per se invalid, save in a 

narrow class of cases in which the [State] can demonstrate, 

under rigorous scrutiny, that it has no other means to advance 

a legitimate local interest.” Cloverland I, 298 F.3d at 211;

see also Cloverland-Green Spring Dairies, Inc. v. Pa. Milk 

Mktg. Bd., 462 F.3d 249, 262 (3d Cir. 2006) (“Cloverland II”) 

(“Any statute that discriminates against interstate commerce 

on its face or in effect is thus subject to heightened scrutiny”) 

(quotations and citation omitted). 

If, however, the state regulation is not discriminatory 

and “regulates even-handedly” with merely “incidental” 

burdens upon interstate commerce, it is subject to a 

“balancing test whereby the statute must be upheld unless the 

burden imposed on interstate commerce is „clearly excessive 

 

28 Statutes that discriminate by “practical effect and design,” 

rather than explicitly on the face of the regulation, are 

similarly subjected to heightened scrutiny. Am. Trucking, 437 

F.3d at 319 n.2 (quoting C & A Carbone, Inc. v. Town of 

Clarkstown, 511 U.S. 383, 394 (1994)).
37

in relation to the putative local benefits.‟” Cloverland I, 298 

F.3d at 211 (quoting Pike v. Bruce Church, Inc., 297 U.S. 

137, 142 (1970)); Davis, 553 U.S. at 339 (same).

Here, the District Court found Delaware‟s statutory 

scheme to be discriminatory on its face, and we are not

persuaded otherwise. DDOL contends repeatedly throughout 

its briefing that the regulatory regime is not discriminatory 

since it applies to all program sponsors regardless of state 

residency. Yet the District Court correctly observed that the 

ATRR “contain an express in-state presence requirement: a 

„registrant‟ sponsor must „regularly maintain[ ] a place of 

business in Delaware‟ that is not a site trailer, temporary 

structure, or post office box.” Tri-M Group, 705 F. Supp. 2d 

at 344 (quoting 19-1000-1101 DEL. ADMIN. CODE § 3.1). 

Without establishing this in-state presence, an out-of-state

contractor cannot become a registered sponsor of Delawareregistered apprentices, and is required to reimburse all 

employed apprentices at the higher mechanic‟s rate. See 19-

1000-1101 DEL. ADMIN. CODE §§ 6.2.6 & 6.2.7. As such, the 

regulations on their face restrict sponsor registration – and the 

concomitant lower wages pertaining thereto – to in-state 

contractors or those possessing a permanent place of business

in Delaware. This statutory scheme forces out-of-state 

contractors such as Tri-M to “surrender whatever competitive 

advantages they may possess” by burdening them with 

expenditures for a new local operation, or with the payment 

of increased wages on their contracts, thereby increasing their 

costs and decreasing their ability to submit competitive bids 

for projects. 

Our conclusion here is informed by the Supreme 

Court‟s reasoning in Granholm, which rejected a New York 
38

state law requiring out-of-state wineries to establish a branch 

factory, office, or storeroom in the state in order to ship wine 

directly to New York consumers. 544 U.S. at 470. At the 

same time, in-state wineries received the same shipping 

privileges simply by applying for a license. Id. Finding that

the extra step of establishing an office for out-of-state 

wineries “[drove] up the cost of their wine,” the Supreme 

Court found New York‟s “in-state presence requirement” 

discriminatory and applied heightened scrutiny, noting that 

such discrimination “runs contrary to our admonition that 

States cannot require an out-of-state firm „to become a 

resident in order to compete on equal terms.‟” Id. at 474-75 

(quoting Halliburton Oil Well Cementing Co. v. Reily, 373 

U.S. 64, 72 (1963)). Echoing this holding, we subsequently 

noted that “statutes that increase out-of-state competitors‟ 

costs are subject to heightened scrutiny under the Commerce 

Clause.” Am. Trucking, 437 F.3d at 322.

The instant regulations explicitly treat in-state and outof-state economic interests differently by compelling out-ofstate contractors “to become [ ] resident[s] in order to 

compete on equal terms.” Granholm, 544 U.S. at 474-75. 

Contrary to DDOL‟s misleading assertion that Tri-M 

voluntarily chose not to subject its apprenticeship program to 

DDOL oversight and regulation, Tri-M‟s purported “choice”

in the matter would entail an assumption of costs not imposed 

upon in-state contractors. Accordingly, the regulations

effectuate a protectionist bias against out-of-state contractors

and are subject to heightened scrutiny.

29

 

29 Even were we to find the disputed regulations not facially 

discriminatory, we would nevertheless conclude that the 

regulations discriminate in effect by requiring out-of-state 
39

Once the party challenging the statute meets its burden 

of showing discriminatory design or effect, the burden shifts 

to the State to demonstrate “„1) that the statute serves a 

legitimate local interest, and 2) that this purpose could not be 

served as well by available non-discriminatory means.‟” 

Freeman v. Corzine, -- 629 F.3d 146,158 (3d Cir. Dec. 17, 

2010) (quoting Am. Trucking, 437 F.3d at 319). Moreover, 

the “absence of evidence is dispositive, because „[t]he burden 

is on the State to show that the discrimination is demonstrably 

justified,‟ and we may „[u]phold state regulations that 

discriminate against interstate commerce only after finding, 

based on concrete record evidence, that a state‟s 

nondiscriminatory alternatives will prove unworkable.‟” Id.

at 161 (quoting Granholm, 544 U.S. at 492-93) (emphasis and 

alterations in original). 

DDOL contends that it has a legitimate interest in 

safeguarding the safety and welfare of all apprentices by 

requiring a permanent place of business in Delaware, and that 

it lacks the resources to effectively monitor out-of-state

apprenticeship programs for compliance with the Delaware 

standards. Its position is belied, however, by the State‟s 

conduct in this case, as well as the evidentiary history of the

regulations at issue. The evidence and testimony adduced by 

the parties demonstrated the retaliatory motivations 

underlying the amendment of the Delaware regulations in 

1999 to include the permanent place of business requirement. 

Prior to that time, the disputed regulations contained no such 

 

contractors to pay higher mechanic‟s wage rates to registered 

apprentices merely because the registering contractor lacks a 

permanent place of business in Delaware.
40

residency condition, and Tri-M was a registered apprentice 

sponsor in Delaware. (App‟x at A493-494.) As the District 

Court discussed, the State added the discriminatory residency 

requirement to the regulatory regime in response to similar 

legislative enactments by Pennsylvania and Maryland. Tri-M 

Group, 705 F. Supp. 2d at 346. Rather than advancing the 

legitimate state interest in improving apprentice labor and 

wage conditions, this amendment primarily reflected an 

intransigent “contest of wills over apprentice recognition” 

between neighboring states. Id. 

Moreover, as the District Court concluded, the 

demonstrated existence of non-discriminatory alternatives for 

ensuring the safety and training of apprentices did not 

overcome the per se invalidity presumption applicable to 

discriminatory regulations. Tri-M‟s lack of a permanent 

place of business in Delaware did not prevent DDOL from 

conducting a thorough investigation to ensure Tri-M‟s 

compliance with the PWL and ATRR. See id. (“In essence, 

defendant argues that the DDOL cannot take out-of-state 

companies at their word, but did exactly that with respect to 

its investigation of plaintiff.”). Indeed, other than a few 

conclusory statements to that effect, DDOL advanced no 

evidence to support its contention that monitoring out-of-state 

contractors working on in-state public projects is any more 

difficult than for in-state contractors, much less that such 

oversight is “unworkable,” as Granholm requires. See 544 

U.S. at 493. Indeed, we find the record devoid of evidence to 

substantiate DDOL‟s assertion that it could not verify out-ofstate work standards through postal or electronic transmission 

of “certified payrolls, tax records, or other documentation as 

compared to a personal inspection of the apprentice‟s out-of-
41

state work job site.” See Tri-M Group, 705 F. Supp. 2d at 

346. 

The “Commerce Clause cases demand more than mere 

speculation to support discrimination against out-of-state 

[interests].” Granholm, 544 U.S. at 492. DDOL‟s vague and 

unsubstantiated justifications for the discriminatory 

regulations failed to clear this hurdle, and we can discern no 

evidence confirming that the permanent place of business 

requirement actually advances legitimate interests or that 

“nondiscriminatory alternatives will prove unworkable.”

30

 

See Freeman, -- F.3d --, 2010 WL 5129219, at *9. 

Accordingly, we conclude that the disputed regulations do not 

withstand heightened scrutiny and violate the dormant 

Commerce Clause.

III. Congressional Authorization of the Discriminatory 

Regulatory Scheme

Finally, we consider DDOL‟s argument that Congress 

and the United States Department of Labor (“USDOL”)

expressly approved the challenged state regulation, thus 

removing any objection under the dormant Commerce 

Clause. The District Court rejected this argument, finding 

DDOL‟s “assertion that Congress‟s empowerment of the 

USDOL with „regulatory power‟ somehow nullifies the 

dormant commerce clause issue presented in this case is, at a 

 

30 While DDOL could have potentially satisfied its burden by 

demonstrating that the pre-1999 regulatory framework –

which did not mandate a permanent in-state present for outof-state contractors – was unworkable, it adduced no 

argument or concrete evidence to support this position.
42

minimum, not compelling.” Tri-M Group, 705 F. Supp. 2d at 

343. We agree.

It is well established that “Congress can authorize 

states to impose restrictions that the dormant Commerce 

Clause would otherwise forbid.” Cloverland I, 298 F.3d at 

210 n.13; see also Pic-A-State Pa., Inc. v. Reno, 76 F.3d 

1294, 1304 (3d Cir. 1996) (“Congress may consent to state 

regulation that discriminates against interstate commerce.”) 

(citation omitted). “When Congress so chooses, state actions 

which it plainly authorizes are invulnerable to constitutional 

attack” since Congress‟s commerce power in such instances 

is “not dormant, but has been exercised by that body.” 

Northeast Bancorp, Inc. v. Bd. of Gov’rs of Fed. Res. Sys., 

472 U.S. 159, 174 (1985); see also Life Partners, Inc. v. 

Morrison, 484 F.3d 284, 291 (4th Cir. 2007) (“Congress 

holds the authority to „redefine the distribution of power over 

interstate commerce‟ by „permit[ting] the states to regulate 

the commerce in a manner which would otherwise not be 

permissible.‟”) (quoting So. Pac. Co. v. Arizona, 325 U.S. 

761, 769 (1945)). 

Importantly, however, congressional consent must be 

express, and is only evidenced “where Congress has 

„affirmatively contemplate[d] otherwise invalid state 

legislation,‟ and „[w]here state or local government action is 

specifically authorized by Congress.‟” Norfolk So. Corp. v. 

Oberly, 822 F.2d 388, 393 (3d Cir. 1987) (internal citations 

omitted). “Because of the important role the Commerce 

Clause plays in protecting the free flow of interstate trade, 

[the Supreme] Court has exempted state statutes from the 

implied limitations of the Clause only when the congressional 

direction to do so has been „unmistakably clear.‟” Maine, 
43

477 U.S. at 138-39 (quoting Wunnicke, 467 U.S. at 91); see 

also Arab African Intern. Bank v. Epstein, 10 F.3d 168, 172-

73 (3d Cir. 1993) (“Congress must manifest its unambiguous 

intent before a federal statute will be read to permit or 

approve . . . a violation of the Commerce Clause.”) (quoting 

Wyoming, 502 U.S. at 458). Moreover, the state has the 

“burden of demonstrating a clear and unambiguous intent on 

behalf of Congress to permit the discrimination against 

interstate commerce.” Wyoming, 502 U.S. at 458.

DDOL presents the Fitzgerald Act, 29 U.S.C. § 50 et 

seq., as reflecting Congress‟s intent to remove from 

Commerce Clause scrutiny State regulations implemented 

pursuant to the Act, including the discriminatory regulations

at issue here. The Act authorized and directed the Secretary 

of Labor “to formulate and promote the furtherance of labor 

standards necessary to safeguard the welfare of apprentices . . 

. [and] to cooperate with State agencies engaged in the 

formulation and promotion of standards of apprenticeship.” 

29 U.S.C. § 50. The implementing regulations provide “a 

detailed regulatory scheme defining apprenticeship programs 

and their requirements, and establish a review, approval, and 

registration process for proposed apprenticeship programs 

administered by State Apprenticeship Councils under the 

aegis of the United States Department of Labor.” 

Hydrostorage, Inc. v. N. Cal. Boilermakers Local Joint 

Apprenticeship Comm., 891 F.2d 719, 731 (9th Cir. 1989), 

abrogated in part on other grounds as stated in Engine Mfrs. 

Ass’n v. S. Coast Air Quality Maintenance Dist., 498 F.3d 

1031, 1044 (9th Cir. 2007).31 

 

31 Pursuant to the pertinent regulations, the Department of 

Labor may “recognize” a State Apprenticeship Agency, 
44

While DDOL is correct that the Fitzgerald Act 

provides for state regulation of apprenticeship standards and 

authorizes the Department of Labor to cooperate with state 

agencies in their regulation of apprenticeship programs,

DDOL failed to establish that the Act and the implementing 

regulations expressly authorized the states to enact 

apprenticeship regulations that discriminate against out-ofstate interests, let alone in an “unmistakably clear” manner. 

DDOL references several of the implementing regulations, 

each of which “relate only to eligibility for federal 

registration.” See Hydrostorage, 891 F.2d at 731; see also 

Assoc. Bldrs. & Contractors v. Perry, 817 F. Supp. 49, 53 

(E.D. Mich. 1992) (same). Notably, none of the referenced 

regulations clearly and unambiguously manifests Congress‟s 

intent to empower the State to discriminate against interstate 

commerce; the same may be said of the Act itself. 

In fact, a comparison of the cases relied upon by 

DDOL is instructive. In Norfolk Southern Corporation v. 

Oberly, the district court examined whether developmental 

 

which confers upon that agency the “non-exclusive authority 

to determine whether an apprenticeship program conforms to 

the published standards.” 29 C.F.R. § 29.13. To be 

recognized, the state agency “must submit a State 

apprenticeship law . . . that conforms to the requirements of 

29 CFR parts 29 and 30,” which must include, inter alia, “a 

description of the basic standards, criteria, and requirements 

for program registration and/or approval,” as well as “a 

description of policies and operating procedures which depart 

from or impose requirements in addition to those prescribed 

in this part.” Id.
45

restrictions in the Delaware Coastal Zone Act were 

specifically authorized under the federal Coastal Zone 

Management Act of 1972, 16 U.S. § 1454 et seq. 632 F. 

Supp. 1225, 1245 (D. Del. 1986). After careful review, the 

court found that “Congress deliberately and repeatedly spoke 

of „choices‟ to be made by the states,” and expressly 

committed to the states the power “to resolve choices among 

competing uses in a manner that might otherwise be subject 

to Commerce Clause challenge.” Id. at 1248. 

Similarly, in Prudential Insurance Company v. 

Benjamin, in the context of the McCarron Act, 15 U.S.C. § 

1011 et seq., the Supreme Court observed that Congress 

“intended to declare, and in effect declared, that uniformity of 

regulation, and of state taxation, are not required in reference 

to the business of insurance.” 328 U.S. 408, 431 (1946). 

Finding Congress‟s determination that “state taxes, which in

[Congress‟s] silence might be held invalid as discriminatory, 

do not place on interstate insurance business a burden which 

it is unable generally to bear,” the Court concluded that 

rejection of a state tax “would flout the expressly declared 

policies of both Congress and the state.” Id. at 431, 433. 

Finally, DDOL‟s citation to White is also inapposite, for in 

that instance, “the federal regulations for each program 

affirmatively permit[ted] the type of parochial favoritism 

expressed in the order.” 460 U.S. at 213 (noting that the 

Housing and Urban Development Act of 1968 required that 

“opportunities for training and employment be given to 

lower-income residents of the project area”).

This jurisprudence makes clear that courts will find 

congressional authorization to discriminate against interstate 

commerce only where such behavior is clearly and 
46

affirmatively contemplated by Congress, and expressly 

authorized in the statutory language. See Oberly, 822 F.2d at 

393. The regulatory language defining eligibility for 

apprenticeship program registration that DDOL relies upon 

does not manifest in an unmistakably clear manner that 

Congress expressly envisioned or authorized a state to 

exercise its cooperative apprenticeship regulatory power to 

discriminate in favor of in-state parties.

Accordingly, we reject DDOL‟s argument that the 

United States Secretary of Labor‟s recognition of the 

Delaware apprenticeship agency as conforming with the 

pertinent implementing regulations immunizes the regulation 

in dispute from dormant Commerce Clause review. Only 

“Congress may authorize the States to engage in regulation 

that the Commerce Clause would otherwise forbid.” Maine, 

477 U.S. at 138. The Fitzgerald Act did not explicitly endow 

the Secretary with authority to permit discrimination against 

interstate commerce, and DDOL provided no other basis to 

conclude that discriminatory regulation may be authorized by 

a federal agency.

Because Congress did not authorize the discrimination 

at issue, DDOL‟s regulatory scheme constitutes 

impermissible discrimination under the dormant Commerce 

Clause.

Conclusion

For the foregoing reasons, we will affirm the District 

Court‟s grant of summary judgment in this matter.
HARDIMAN, Circuit Judge, concurring,

I concur in the result in this case. Unlike my 

colleagues, I would hold that the Delaware Department of 

Labor (DDOL) forfeited its right to argue on appeal that 

Delaware acted as a market participant because it failed to 

raise that argument in the District Court.

I

DDOL provides no explanation for its failure to raise

the market participant exception to the Dormant Commerce 

Clause in the District Court. Nevertheless, the Majority 

reaches this issue because the appeal “implicates significant 

issues of state sovereignty” and “raises a pure question of 

law.” True as these conclusions are, they do not constitute

“exceptional circumstances” necessary to overcome DDOL‟s 

forfeiture of a significant argument that it could have and 

should have made in the District Court.

1

 

1

The parties describe Delaware‟s failure to raise the 

market participant exception as a “waiver.” As the Supreme 

Court has explained, “[w]aiver is different from forfeiture. 

Whereas forfeiture is the failure to make the timely assertion 

of a right, waiver is the „intentional relinquishment or

abandonment of a known right.‟” United States v. Olano, 507 

U.S. 725, 733 (1993) (quoting Johnson v. Zerbst, 304 U.S. 

458, 464 (1938)). Under this definition, Delaware‟s failure to 

raise this issue in the District Court is more properly 

characterized as a “forfeiture” than as a “waiver.” 
2

At issue in this appeal are some $10,000 in wages TriM paid to six apprentices who worked on a state-sponsored 

construction project. The project has been completed, so all 

that remains for adjudication is who must pay this relatively 

modest sum. In my view, this has little or no effect on the 

public interest and, regardless of which side prevails, cannot 

rise to the level of “manifest injustice.” Accordingly, I would 

not excuse DDOL‟s forfeiture.

If we adhere to our forfeiture doctrine in this appeal, 

the constitutionality of the Delaware Prevailing Wage Law 

can be litigated in the next case and DDOL may, if it chooses, 

raise the market participant exception at that time. If the 

issue were joined and fully litigated in the District Court, we 

would have the benefit of a complete record and a reasoned 

decision by a trial judge.2 Moreover, as the Majority rightly 

notes, litigants in thirty-seven other states would be free to 

 

2

 Although the Majority states that “we are confronted 

solely with a pure question of law,” Maj. Op. at 16-17, the 

opinion relies, to a large extent, on factual determinations 

regarding the scope of Delaware‟s regulatory scheme. For 

instance, the Majority finds that Delaware‟s apprenticeship 

wage and training regulations “are not limited to public works 

projects,” because they apply, on their face, to any Delawareregistered apprentice sponsor operating in the State. The 

record does not reflect, however, whether the State actively 

regulates non-public-works projects or whether companies 

may opt out of the program once their contractual obligations 

to the State are complete. These are precisely the types of 

factual questions we expect a trial court to find, and our task 

would be made clearer if we allowed the District Court to do 

so in this case.
3

challenge regulations granting similar benefits to in-state 

companies. Maj. Op. at 13. As a result, district courts 

throughout the country would have the opportunity to review 

the constitutionality of a wide array of state procurement 

statutes, and in so doing provide appellate courts with a 

deeper understanding of this unsettled area of the law.

3

 Cf. 

Bagot v. Ashcroft, 398 F.3d 252, 256 (3d Cir. 2005) (deciding 

the merits of a forfeited claim where the “proper resolution of 

the legal question, though not exactly simple, [wa]s 

reasonably certain”). 

I agree with the Majority that in some cases “the 

public interest is better served by addressing [an issue] than 

by ignoring it.” Maj. Op. at 15-16 (citing Barefoot Architect, 

Inc. v. Bunge, -- F.3d --, 2011 WL 121698, at *10 (3d Cir. 

Jan. 14, 2011). For instance, in United States v. Bagot, 398 

F.3d 252 (3d Cir. 2005), we exercised our discretion to 

review a deportee‟s claim after finding that “failing to 

consider Bagot‟s arguments would result in the substantial 

injustice of deporting an American citizen.” Id. at 256. 

Similarly, in United States v. Petersen, 622 F.3d 196, 202 n.4 

(3d Cir. 2010), we held that, at least where the “public 

reputation of judicial proceedings” is at stake, we have an 

“institutional” interest in resolving unsettled questions 

regarding a defendant‟s trial rights. Id. at 202 n.4. Finally, in 

Bunge, we held that inadvertent mistakes, such as a party‟s 

 

3 As the Majority notes, “application of the distinction 

between „market participant‟ and „market regulator‟ has [] 

occasioned considerable dispute in the Supreme Court‟s 

jurisprudence,” Maj. Op. at 26 n.24, and our own 

jurisprudence “reflects limited opportunity to opine regarding 

the exception,” id. at 21.
4

invocation of “the wrong definition of the tort,” does not 

necessarily trigger the application of the waiver doctrine. 

2011 WL 121698, at *10.

Unlike in Bagot, here I see no exigency that 

necessitates a prompt resolution of the market participant 

issue. Indeed, as noted above, a trial court‟s thorough 

analysis of the legal and factual questions raised on appeal 

would be tremendously helpful in deciding this difficult issue. 

Moreover, the “institutional” interest in resolving this issue is 

minimal. There is no evidence that lower courts are reaching 

inconsistent results or that states are responding to the legal 

uncertainty by halting enforcement or repealing regulations 

that may be discriminatory. The fact that the issue is one of 

constitutional import does not alone transform it into a matter

of public importance, as we have enforced waivers in 

weightier circumstances, including those affecting 

constitutional rights. See e.g., United States v. Lockett, 406 

F.3d 207, 212 (3d Cir. 2005) (holding that defendant waived 

his legal argument for “limited consent” under the Fourth and 

Fourteenth Amendments by failing to raise it before the 

district court); Brennan v. Norton, 350 F.3d 399, 418 (3d Cir. 

2003) (finding that defendant waived his legal argument for 

relief under the Petition Clause).

Finally, there is no evidence in this record to suggest 

that Delaware‟s failure to raise the market participant issue 

was inadvertent. Cf. Bunge, -- F.3d --, 2011 WL 121698, at 

*10. Indeed, given that the market participant doctrine has 

long been a recognized exception to the dormant Commerce 

Clause, it is unlikely that counsel for DDOL simply missed 

the issue. The DDOL could just as plausibly have decided to 

pursue an alternative theory after evaluating the relative 

merits of the arguments. See United States v. Nee, 261 F.3d 
5

79, 86 (1st Cir. 2001) (“Th[e] „raise-or-waive rule‟ prevents 

sandbagging; for instance, it precludes a party from making a 

tactical decision to refrain from objecting, and subsequently, 

should the case turn sour, assigning error.”) (citation omitted). 

Just as private litigants may not “jump from theory to theory 

like a bee buzzing from flower to flower,” United States v. 

Rose, 538 F.3d 175, 180 (3d Cir. 2008) (internal citations and 

quotations marks omitted), a state should not be permitted to 

do so in the absence of truly exceptional circumstances.

For these reasons, I concur in the Court‟s judgment.