Opinion
106778-07.
Decided May 5, 2008.
Plaintiff's counsel is Virgina Barnes Faccarino, NYC, NY.
Defendant's counsel Millman Labida Law Group, Lake Success, NY.
This is a putative class action lawsuit arising from claims by the plaintiffs (individually Dabrowski," Gajewski," and Cwalina") that they were not paid the prevailing rate of wage while employed by defendant ABAX Incorporated (ABAX"). ABAX was the general contractor (GC") on certain construction projects and the plaintiffs were laborers who worked for it. Defendants John Bleckman and Edward Monaco are officers and directors of ABAX (individuals").
The court now has before it separate motions by ABAX and the individuals to dismiss this action pre-answer on the basis that the plaintiffs have failed to state a cause of action. Plaintiffs oppose both motions in all respects.
On a motion to dismiss pursuant to CPLR § 3211, the pleading is to be afforded a liberal construction and the facts as alleged in the complaint must be accepted by the court as true, and are to be accorded every favorable inference. Leon v. Martinez, 84 NY2d 83 (1994); Morone v. Morone, 50 NY2d 481 (1980); Beattie v. Brown Wood, 243 AD2d 395 (1st dept. 1997). In deciding these motions to dismiss the court will consider whether, accepting all of the plaintiff's facts, they support the causes of action asserted. Rovello v. Orofino Realty Co., 40 NY2d 633, 634 (1976).
The motions are hereby consolidated for consideration and will be decided in a single decision and order which is as follows:
Facts and Arguments Considered
The plaintiffs contend that they worked for ABAX on a number of public works projects, as defined under Article 8 of the Labor Law, and although they worked in excess of 40 hours a week, defendants failed to pay them the prevailing rate of wage for the work they did. Plaintiffs contend they were denied other supplemental benefits of employment, such as disability insurance. None of the plaintiffs are English proficient. Polish is their native language. Though each plaintiff is a carpenter by trade, the putative class consists of a variety of private sector laborers, including iron workers, hazardous material workers, painters, etc. who worked for ABAX between May 2001 and the present on public works projects throughout New York City and in the state of New Jersey.
The projects plaintiffs worked on range from public schools to residential housing; each involves a contract between ABAX and some governmental agency, such as HPD for repairs, abatement, etc. Each contract was filed with New York City's Vendor Information Exchange System known as VENDEX."
Each plaintiff claims he was paid $26 an hour, regardless of whether he worked more than a 40 hour work week, and contends he was not apprised of the prevailing rate of wage for his job. Prevailing rate of wage is defined as the rate of wage paid in the locality by virtue of collective bargaining agreements between a labor union and an employer. Labor Law § 220 (5) (a). The plaintiffs assert that although they have administrative remedies under the Labor Law, they are not precluded from pursuing — and have elect to pursue — their common law options based upon contract principles (discussed further below).
Although their dates of employment differ — Dabroski was employed from October 1997 until July 2006, Gajewski from January 2005 until September 2006, and Cwalina from 2001 until March 2005 — plaintiffs' employment dates overlap and are within the range set for the putative class.
Plaintiffs have asserted 12 causes of action. They are as follows: breach of public works contracts (1st COA), failure to pay overtime compensation in violation of New York State Labor Law § 663 and 12 New York Code Rules and Regulations 142-2.2 (2nd COA), quantum meruit (3rd COA), unjust enrichment (4th COA), failure to pay wages in violation of Labor Law § 191 (5th COA), failure to pay wages in violation of New York State Labor Law §§ 195 (3), 198 (1) and 198 (1-A) (6th COA), claims against the bonding companies based upon suretyship (7th and 8th COA), failure to pay overtime and other benefits in connection with Public Works Contracts in violation of New York State Labor Law § 663 (9th COA), failure to pay prevailing wage in violation of New Jersey Statutes Annotated 34:11-56.40 (10th COA), piercing of corporate veil (11th COA) and claims against individuals and their failure to pay wages in violation of New Jersey Statutes Annotated 34:11-4.1 (12th COA).
The defendants argue that plaintiffs have failed to state a cause of action. They contend that the plaintiffs complaint does not sufficiently detail the contracts involved, and if it does, then there is no basis for their quasi contract claims because they have contracts to rely on. ABAX separately argues that the court should now consider whether plaintiffs' claims meet the necessary threshold for certification as a class to avoid prolonging this action or burdening the defendants with unnecessary discovery. ABAX contends that each plaintiff's claims are different from one another, and therefore, the individual nature of these claims trumps the elements of a class action, which are numerosity, commonality, typicality, etc.
The individual defendants argue that because plaintiffs are claiming violations of New York State Labor Law § 220, they must first exhaust their administrative remedies under the statute before bringing a plenary action in court. Therefore, the individuals contend this action is brought prematurely and must be dismissed for that reason.
ABAX argues that because some of the public works projects were in the state of New Jersey, and New Jersey law must be applied, it is too confusing for the court to apply New York and New Jersey law, which is another basis to dismiss this action. Thus ABAX contends that not only is the application of different state laws complicated, it further undercuts plaintiffs' claim this is a certifiable class with a plurality of issues. In any event, all the defendants argue that the New Jersey related contracts claims are nebulous and insufficiently pled, and therefore should be dismissed for those reasons as well.
All the defendants argue that there is no legal basis to pierce the corporate veil as there is no proof of complete domination or that even if there was domination, that the owners committed a fraud against the plaintiffs which resulted in their injury. The defendants deny there is any basis to assert claims against the individually named defendants. The defendants all deny that the plaintiffs worked on public works projects or that the work they did was subject to the prevailing wage laws.
Plaintiffs respond that it is premature for the court to consider whether this case will be class certified because they have not cross moved to certify. In any event, plaintiffs argue, they are confident that at the appropriate time, when the do move for class certification, they will prove the threshold elements of a class action. They urge the court to allow this case to proceed to discovery so they can further develop their claims which can then be better evaluated by the court.
Plaintiffs contend they have a right to maintain a common law breach of contract action for unpaid prevailing wages and benefits in connection with a publicly financed construction project and that they are not suing under New York State Labor Law § 220 which they agree would require an exhaustion of administrative remedies.
Discussion
At the outset, the court considers defendants' argument that it must scrutinize this complaint more closely than it otherwise would because it involves a putative class. The legal authority cited for this argument, that the court may and should consider the eligibility of the claims for class certification before issue has been joined, does not, however, set forth the bright line standard urged. Letouzel v. Eastman Kodak Co., 2006 U.S. Dist Lexis 33453 (WDNY 2006) ( nor). Not only can Letouzel be limited to its unique set of facts (there were claims asserted under 51 different jurisdictions) Rule 23 (c) (1) of the Federal Rules of Civil Procedure specifically encourages the court to consider at an early practicable time" whether to certify the action as a class action.
Although CPLR § 901, applicable to class actions, is modeled on Rule 23, the statutes are not identical. In any event, a motion to certify a class has been held to be premature before issue has been joined [ David B. Lee Co. v. Ryan, 266 AD2d 811 (4th Dept 1999)] and the level of analysis applicable to a pre-answer motion to dismiss is wholly different than that attendant to a motion to certify a class. In any event, affording the complaint a liberal construction, the court finds that the individuality of the claims do not so far out number their plurality to warrant a decision in favor of the defendants, pre-answer. Therefore, this branch of defendant's motion is denied without prejudice to the court making a full analysis of the issues attendant to class certification, including plurality, when the issue is appropriately before the court. The court proceeds to examine the other legal arguments presented.
Both sides agree that no private right of action exists under New York State Labor Law § 220 which provides that a complaint under this statute shall be heard by a fiscal officer at a hearing. Labor Law § 220 (8). Pesantz v. Boyle Environmental Services, Inc., 251 AD2d 11 (1st Dept 1998). Thus, it is established law that before a plaintiff can maintain a plenary action under New York State Labor Law § 220, he or she must exhaust her administrative remedies under the statute. Pesantz v. Boyle Environmental Services, Inc., supra. It is undisputed that plaintiffs have not taken undertaken those steps, therefore any claims for unpaid wages under the statute could not be brought, but would have to be dismissed.
New York State Labor Law § 220 is not, however, the plaintiff's exclusive remedy to recover unpaid prevailing wages and benefits. De La Cruz v. Caddell Dry Dock Repair Co., Inc. , 22 AD3d 404 (1st Dept 2005). Plaintiffs have the right to maintain a common law breach of contract claim for underpayment of wages and benefits in connection with a publicly financed project. Pesantz v. Boyle Environmental Services, Inc., 251 AD2d at 12; Pajaczek et al v. Cema Construction Corp., 18 Misc 3d 1140 (A) (NY Sup 2008). Furthermore, since plaintiffs are not seeking punitive damages, which would only be available under the statute [Labor Law § 198 (1-A)], but only seek to recover their actual damages, they have set forth a cognizable cause of action, thereby defeating the defendants' motion to dismiss their claims (2nd, 5th, 6th and 9th COA), to the extent they are asserted on the basis of common law, and not under the Labor Law § 220. Guzman et al v. VLM, Inc., et al., 2007 WL 2994278 (EDNY 2007).
Plaintiffs have also sufficiently described the kinds of projects they were involved in and the general nature of the contracts between ABAX and the governmental entities giving rise to their underpayment of wages and other unpaid benefits claims (1st and 5th COA). They have described the location, nature and time period of the work performed and the amounts they were paid. Maldonado v. Olympia Mechanical Piping Heating Corp. , 8 AD3d 348 (2nd Dept 2004). In doing so they have also defeated defendants' motion to dismiss these contract based causes of action at this stage of the litigation.
The court has considered defendants' argument that plaintiffs' quantum meruit and unjust enrichment claims are inconsistent with their claims that they were denied benefits and not paid a prevailing rate of wage in connection with certain public works contracts. However, since these claims are pled in the alternative, and the contract claims have not been dismissed, these quasi contract claims (3rd and 4th COA) withstand defendants' motion to dismiss as well. See: Evans v. Perl, 2008 WL 1735059 (NY Sup Ct 2008) ( as cases cited therein); D'Amour v. Ohrenstein Brown LLP, 17 Misc 3d 1130 (A) (NY Sup Ct 2007).
The claims by plaintiffs based upon New Jersey law also withstand defendants' motion to dismiss at the pleading stage. Affording the complaint its broadest construction, plaintiffs have stated a cause of action under New Jersey's prevailing wage act which permits to an aggrieved worker to either pursue administrative or private remedies. Trois v. Extel Communications, Inc., 345 N.J. Super 231 (NJ Super A.D. 2001). The contracts are sufficiently described to withstand, and defeat, defendants' motion to dismiss the 10th and 12th COA at the pleading stage of this action. Arguments that the diversity in the law to be applied requires this court to deny class certification should be raised and will be addressed at a later time in connection with plaintiffs' motion under CPLR § 901 et seq. The court does not agree that any resulting complication from having to apply two different state's laws in itself warrants dismissal. Letouzel v. Eastman Kodak Co., 2006 U.S. Dist Lexis 33453 (WDNY 2006) ( nor).
Plaintiffs seek to prove at trial that the individually named defendants exercised total and exclusive domination over ABAX and therefore, they should be held personally responsible for the plaintiffs' damages. Plaintiffs contend further that the individuals under reported hours and misreported trade classifications of their employees so as to pay the workers less than the prevailing rate of wage. Although the law permits the incorporation of a business for the very purpose of escaping personal liability [ Joan Hansen Co., Inc. v. Everlast World's Boxing Headquarters Corp., 296 AD2d 103 (1st Dept 2002)], a court may, in certain situations, pierce the corporate veil where: (a) the owner exercised complete dominion over the corporation; (b) such dominion was utilized to cause a wrong against the plaintiff; (c) the corporation was under capitalized; and (d) personal use of corporate funds [ Hyland Meat Co., Inc. v. Tsagarakis, 202 AD2d 552 (2nd Dept 1994)]. Accepting plaintiffs' facts and according them every possible inference, plaintiffs have stated a cause of action for piercing the corporate veil and imposing personal liability upon the individuals named (11th and 12th COA).
Although defendants urge the court to dismiss the claims asserted against the bonding companies based upon surety ship and under New York State Labor Law § 220-g because they are derivative, the legal authority cited does not require the court to do so, unless the such claims are derivative of other, dismissed causes of action. Maldonado v. Olympia Mechanical Piping Heating Corp. , 8 AD3d 348 at 350 — 351. Therefore, defendants' motion to dismiss the 7th and 8th COA for these reasons is also denied.
Since the complaint survives this pleading stage motion, defendants' time to answer is extended until ten (10) days after service of notice of entry of this decision/order. CPLR § 3211 (f).
The preliminary conference will be held on June 5, 2008 at 9:30 a.m. in Part 10, 80 Centre Street, Room 122.
Any relief requested that has not been addressed has nonetheless been considered and is hereby expressly denied.