Opinion
CV-99-60-RFC-GF
February 1, 2001
Lawrence A. Anderson, ANDERSON LAW OFFICE, Box 2608, 18 Sixth Street N, Great Falls, MT 59403, 406-727-8466, Attorney for Plaintiffs.
Marcia Davenport, CROWLEY, HAUGHEY, HANSON, TOOLE DIETRICH, PO Box 797, 100 N Park Avenue, Suite 300, Helena, MT 59624-0797, 406-449-4165; Gregory A. Luinstra, LUINSTRA SEMINSKY, PC, Box 3267, 17 — Fifth Street S, Great Falls, MT 59403-3267, 406-771-1584; Neil G. Westesen, ATTORNEY AT LAW, 1811 West Dickerson, Suite 17, Bozeman, Mt 59715, 406-556-1430, FTS 556-1433; Attorneys for Defendants ST. PAUL FIRE MARINE INSURANCE COMPANY, a Minnesota corporation, and AMERICAN RENOVATION AND CONSTRUCTION COMPANY, a California corporation.
Ward E. Taleff, ALEXANDER BAUCUS TALEFF PAUL, PO Box 3169, 615 Second Avenue North, Suite 300, Great Falls, MT 59403, 406-761-4800, FTS 761-4804; Attorneys for Defendants JOHN DOES 1 AND 2, and TRENNIS BAER, dba Baer Construction.
ORDER
This is a case involving a contract between the United States and American Renovation and Construction (ARC) for construction of family housing at Malmstrom. Defendant ARC was the primary contractor, defendant Baer a subcontractor, and St. Paul is ARC's surety who provided a bond for the project in accordance with the Miller Act, 40 U.S.C. § 270. Plaintiffs here are individuals who were at one time employed by defendant Baer Construction, which has its own Miller Act claim against St. Paul/ARC.
Baer did not actually brief the issue, but joined in ARC/St. Paul's motion to dismiss and brief in support.
Baer Construction v. ARC/St. Paul, CV-00-12-GF-RFC
Plaintiffs claim jurisdiction pursuant to the Miller Act, 40 U.S.C. § 270, and defendants filed a motion to dismiss for lack of subject matter jurisdiction, pursuant to Rule 12(b)(1). The defendants requested and received, without opposition from plaintiffs, a stay in discovery given the potential dispositive nature of their motion. Defendants further filed a motion to dismiss Count III, which alleges the complaint as a class action. The motions were briefed and oral argument was heard on January 29, 2001. For the reasons given more fully below, the motion to dismiss for lack of subject matter jurisdiction is denied, the motion to dismiss Count III is granted, and the case is stayed pending further proceedings before the Department of Labor (DOL).
Defendants first contend that while the Complaint contains a jurisdictional statement that this action is brought pursuant to the Miller Act, the claims are in essence alleged violations of the Davis-Bacon Act, for which no private right of action exists. Second, the defendants argue that even if the Court were to construe the complaint as a claim under the Miller Act, plaintiffs' failure to observe procedural requirements for filing a Miller Act claim merit dismissal.
Although the defendants have brought the motion, the burden of establishing subject matter jurisdiction is borne by plaintiff. Since federal Courts are courts of limited jurisdiction, the Court must presume lack of jurisdiction until plaintiffs prove otherwise, since it is plaintiffs who are invoking federal jurisdiction. Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994). I find that the plaintiffs have met that burden, in that a Miller Act action exists within the structure of the Davis-Bacon Act.
Paragraph 1 of the Complaint is a jurisdictional statement asserting the existence of a federal question ( 28 U.S.C. § 1331) and relying on the Miller Act, 40 U.S.C. § 270(b). There is no dispute that this Court has jurisdiction over Miller Act claims, which provides that "every person who has furnished labor or material in the prosecution of work . . . shall have the right to sue on such payment bond for the amount, or the balance thereof, unpaid at the time of suit." Id.
The gravamen of the Complaint is contained in Count I, wherein plaintiffs allege breach of contract. The thrust of the allegations in Count I is defendants' failure to properly classify plaintiffs by their skilled trades and pay them in accordance with the requirements of the Davis-Bacon Act — essentially, a claim for back wages. Count II is a pendent claim (wrongful discharge), and Count III realleges all paragraphs as a class action, relying on Rule 23. A fair reading of the Complaint supports defendants' view that the claims are premised on alleged violations of the Davis-Bacon Act. The import of this is that the Davis-Bacon Act does not provide for a private right of action under the circumstances provided here — at least not at this time. The Act provides that the United States Comptroller may withhold payments from contractors and directly pay workers "any wages found to be due." 40 U.S.C. § 276a-2.
The majority of courts interpreting the Davis Bacon Act, including the Ninth Circuit Court of Appeals, have found that no private right of action is created by Section 1 of the Act. "The Davis-Bacon Act was intended as a "general prohibition or command to a federal agency' to require minimum wage stipulations for federal government work contracts; it does not generally grant a private cause of action directly to employees." Operating Engineers v. JWJ Contracting Co., 135 F.3d 671, 676 (9th Cir. 1998) (internal cites omitted). This holding was in agreement with "the majority of circuit courts that have reached the issue" following the reasoning in Universities Research Association v. Coutu, 450 U.S. 754 (1980), in which the Supreme Court stopped just short of reaching the broad issue of whether any private right of action exists under the Davis-Bacon Act. Coutu, at 769.
Plaintiffs rely primarily on a decision from the Seventh Circuit and other district court cases relying on that case to support their contention that the Davis-Bacon Act does contain a private right of action. McDaniel v. University of Chicago, 548 F.2d 689 (7th Cir. 1976). The case pre-dates Coutu, is at odds with the Ninth Circuit holding inOperating Engineers, and does not control the issue presented here.
However, defendants' position that no private right of action exists under the Davis-Bacon Act is not well-reasoned. Should workers find that insufficient funds were withheld by the United States to satisfy Davis-Bacon Act claims, a remedy nonetheless must exist for those workers in order to achieve Congressional intent that workers on federal projects be paid prevailing wages. I find that plaintiffs have a private right of action that is contained within Section 3 of the Davis Bacon Act, codified at 40 U.S.C. § 276a-2(b). Section 3 allows what appears to be a Miller Act action against a contractor and his surety "if the accrued payments withheld under the terms of the contract . . . are insufficient to reimburse" the workers found to have been underpaid. See Peatross v. Global Associates, 849 F. Supp. 746 (D.Hawaii, 1994).
Cases cited to by the parties on the issue of whether a private right of action exists under Davis-Bacon focused on Section 1 of the Act.
Plaintiffs' difficulty is that this condition precedent has yet to be satisfied. Beyond the contracting officer for the Air Force informing ARC that it had found mis-classifications and under payments to twelve employees who are plaintiffs in this action, no other administrative determination was ever made. Disputes over classifications and payment "shall be resolved in accordance with the procedures of the Department of Labor." 29 C.F.R. § 5.5. All questions regarding classification and disputes over rates of pay "shall be referred to the Administrator for appropriate ruling or interpretation." 29 C.F.R. § 5.13.
In the plaintiffs' Memorandum (docket #57, p. 19), they request that if this Court concludes that the Department of Labor must first make its determination on the Davis-Bacon Act claims, then the Court stay this action pending such determination rather than dismiss the claim. This course is legally correct, and is effectively supported by defendants in their reply brief (docket #60, p. 5) wherein they list the practical difficulties for jury understanding at trial absent a DOL determination, and in their further reply to the motion to dismiss Count III (docket #80, p. 5) wherein they state "without a determination by the Department of Labor that there has been a Davis-Bacon Act violation, plaintiffs have no Miller Act claim."
Finally, as previously mentioned, defendants argue in the alternative that the action should be dismissed for plaintiffs' failure to follow the procedural requirements of a Miller Act claim. Whether the notice requirements were met before filing this action presents mixed questions of law and fact better made as a motion for summary judgment. They do not fit within the confines of a motion to dismiss for lack of subject matter jurisdiction, and are not alternative grounds for dismissal under Rule 12(b)(1).
In conclusion, a determination must first be made by the Department of Labor as to whether Davis-Bacon Act violations occurred, and to what extent. If violations were present, and if payments to the contractor withheld by the United States are insufficient to compensate the plaintiffs, the Davis-Bacon Act allows this action for recovery from the surety.
As for Count III, defendants seek to have the class action count dismissed, arguing that Rule 23 does not govern Davis-Bacon Act claims. Defendants argue that the action is governed by the "opt-out" procedures of the Portal to Portal Act, 29 U.S.C. § 255. This claim is a hybrid of sorts — a Miller Act claim authorized by Section 3 of the Davis-Bacon Act. Plaintiffs argue that the court is under a duty to certify a class, but that is not a correct statement of law. Moreover, plaintiffs reliance on Hoffman-LaRoche v. Sperling, 493 U.S. 165(1989) is unavailing. Rather than create such a duty as plaintiffs suggest, the Court in LaRoche simply held that courts have discretion to facilitate notice to potential plaintiffs in a claim brought under the Age Discrimination in Employment Act.
As a practical matter, the class could not be so numerous that simple joinder pursuant to Rule 20 would not ensure that all potential plaintiffs here are given the opportunity to join the suit. Indeed, since a determination must be made by DOL before this action can further proceed, the employment records will establish the set of workers who may be potential plaintiffs.
Accordingly, IT IS HEREBY ORDERED that:
1) defendants' 12(b)(1) motion to dismiss for lack of subject matter jurisdiction (docket #53) is DENIED;
2) defendants' motion to dismiss Count III (docket #70) is GRANTED, subject to plaintiffs being allowed to amend the complaint to join other parties pursuant to Rule 20 following the DOL inquiry;
3) this action is STAYED pending a Davis-Bacon determination by the DOL;
4) the parties shall provide a joint status report by May 1, 2001 and every 3 months thereafter during the stay in the case;
5) the final pretrial conference set for April 12, 2001 and the trial set to begin April 23, 2001 are VACATED.