United States ex rel. Int'l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co.
United States ex rel. Int'l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co.
Opinion of the Court
Electrical contractor The Farfield Company moves to dismiss arguing a federal court may not decide whether it misclassified its union electricians because the Department of Labor declined to resolve this worker classification issue which it claims is central to a False Claims Act case. The Farfield Company argues the misclassification claims are "nonjusticiable" without the Department of Labor's determination. We agreed with The Farfield Company as to a need for the Department of Labor to initially review this issue within its expertise. The Plaintiff inexplicably neglected to do so for over a year. Upon assignment to our docket, we directed the Plaintiff immediately ask for a referral. The Department of Labor declined the referral several weeks ago. But its declination does not destroy our subject matter jurisdiction. It simply declined to invest public resources in this analysis of conduct over a decade ago. We know of no authority, and The Farfield Company offers none, suggesting a party seeking a remedy otherwise within our jurisdiction is not welcome here because the Department of Labor declined the first opportunity to review the worker misclassification issue. We properly deferred to the Department of Labor under the primary jurisdiction doctrine, but with it declining to investigate, we must proceed requiring the Plaintiff prove the misclassification.
I. Background
Nearly ten years ago, on September 17, 2009, the International Brotherhood of Electrical Workers Local Union No. 98 (the "Union") filed a sealed complaint under the False Claims Act
*278Two years later, on September 21, 2011, the United States declined to intervene in the action. The court unsealed the complaint. The Union filed an amended complaint on February 3, 2012.
The Union alleges it investigated Farfield's practices and found Farfield "designed and implemented a scheme of under-bidding prevailing wage projects by classifying workers at lower hourly wage rates than permitted by the Davis-Bacon Act."
Farfield moves to dismiss the amended complaint.
Farfield moved to dismiss the amended complaint arguing, inter alia , the court does not have subject matter jurisdiction over this dispute because the Department of Labor has "exclusive jurisdiction" over the matter.
The Union responded we have subject matter jurisdiction to determine whether Farfield violated the False Claims Act and there is no conflict with the Department of *279Labor's exclusive jurisdiction.
On July 2, 2013, the Honorable Lawrence F. Stengel denied Farfield's motion to dismiss.
The Union seeks experts for trial on classification issues it previously represented as not complex.
The parties engaged in discovery for years, including the appointment of a special discovery master to handle discovery disputes. Discovery continued until an early 2017 status conference where the Union described offering three electrical trade industry experts as witnesses at trial. Judge Stengel ordered the parties to submit briefing on the issue of expert testimony.
Contradicting its earlier position there are no complex classification issues requiring Department of Labor determination, the Union argued it needed expert testimony to oppose any summary judgment motion filed by Farfield and to prove its case at trial.
Farfield contended expert testimony is improper and the court lacks subject matter jurisdiction, arguing if worker classifications are so complex as to require expert testimony, then the court lacks jurisdiction and the matter must be dismissed and referred to the Department of Labor for classification and wage determinations.
The court stays the action and orders the Union to refer the matter to the Department of Labor.
On September 26, 2017, the court stayed, rather than dismissed, the case pending referral to the Department of Labor to resolve the issue of worker classifications and wage determinations under the primary jurisdiction doctrine.
The Union did not move to reconsider the September 26, 2017 Order or otherwise challenge staying the matter pending referral to the Department of Labor for a determination of worker classification and wage determinations. It also did nothing to refer the matter to the Department of Labor or otherwise attempt to prosecute its case.
Over a year later, and after reassignment to our calendar,
We ordered briefing on the futility of referral to the Department of Labor under the primary jurisdiction doctrine.
We removed the case from suspense and, after conference with counsel, granted Farfield leave to file a motion to dismiss the amended complaint on the issue of whether the Order referring the case to the Department of Labor under the primary jurisdiction doctrine should be excused as futile and, if so, the effect of the excusal under the September 26, 2017 order.
*281Farfield again moved to dismiss the Union's first amended complaint arguing if the Department of Labor is unable to make a classification determination, the matter is "nonjusticiable" and, under the primary jurisdiction doctrine, we have no jurisdiction over the matter.
The Union responded a referral to the Department of Labor is futile because there is no mechanism for a referral from a federal court to the Department of Labor; under its policy, the Department of Labor will not investigate allegations of Davis-Bacon Act violations more than two or three years old; the Department of Labor is estopped from pursuing administrative action because the United States declined to intervene in the case; and, we have jurisdiction to resolve the issues.
The United States filed a statement of interest declining to take a position on Farfield's motion or whether we should excuse as futile the referral to the Department of Labor.
After review, we denied Farfield's motion without prejudice to be renewed after the Union referred the matter to the Department of Labor; ordered the Union to refer the matter to the Department of Labor by December 26, 2018; placed the matter in suspense; and ordered the Union provide us with monthly status reports.
The Department of Labor declines the referral.
In its third monthly report on March 15, 2019, the Union represented the Department of Labor declined referral (the "Letter")
• by the time it received the referral in December 2018, "performance under the contract had been completed and the contract had been closed for over ten years";
• Wage and Hour Division "resources and workload generally do not permit investigations into closed contracts";
• "[r]equesting the payment of back wages after performance of a contract has been completed, and when no funds remain to be withheld on the contract, is typically not feasible";
• "where contract payments have not been withheld, a six-year statute of limitations for enforcement of Davis-Bacon Related Act requirements typically would apply";
• the Wage and Hour Division "cannot determine whether the workers in question were misclassified and underpaid without an investigation concerning the specific work they performed, and [the Wage and Hour Division] is not in a position to conduct such an investigation under the circumstances present in the case";
• "[a] precise wage/classification determination would be challenging given *282the significant passage of time in this case"; because of the contradictory evidence presented by the parties "any investigation in this case likely would be highly fact-intensive" such that the Department "presumably would have to invest significant resources and time to make a determination such as would be required by the Referral";
• the Wage and Hour Division investigated Farfield's compliance with the Davis-Bacon Act on the contracts in Fall 2004,34 "however, not only did that investigation not result in any finding of misclassification, conducting a wage/classification determination at this juncture would require an entirely new investigation (including review of additional documentation and witness interviews) that [the Wage and Hour Division] is ill-positioned to conduct ..."; and
• "it is within the discretion of the [Wage and Hour Division] Administrator to decide whether to enforce Davis-Bacon labor standards in a particular case.35
We allowed the parties to move for relief based on the Department of Labor's Letter.
II. Analysis
We today know the Department of Labor declined referral of this matter as contemplated in the September 26, 2017 Order. We are now faced with the question of how the Department's declination to take the referral affects resolving this dispute. According to Farfield, the Department's unwillingness to accept referral of the worker misclassification issue is the death knell for the Union's claims. Farfield contends the Department's decision renders this matter nonjusticiable; we cannot grant the Union relief under the False Claims Act without the Department's misclassification determination; and, we must dismiss the case with prejudice.
The Union responds the Department of Labor's declining the referral demonstrates the futility of referral in the first place. The Union contends we have, and always had, subject matter jurisdiction over this action and may resolve the misclassification issues and, if we dismiss the matter, it will be out of court and left without a remedy.
A. The primary jurisdiction doctrine.
The primary jurisdiction doctrine "allows court to stay proceedings or to dismiss a complaint without prejudice pending the resolution of an issue within the special competence of an administrative *283agency."
The primary jurisdiction doctrine is prudential and does not "implicate[ ] the subject matter jurisdiction of the federal courts."
In Farfield II , Judge Stengel determined the primary jurisdiction doctrine is applicable here under Baykeeper's four-factor test.
B. What is the effect of the Department of Labor's declining the referral?
At the time we issued our November 28, 2018 Order, we had no evidence of the Department of Labor's position. Now we do. The Department of Labor declined to take the referral for numerous reasons but primarily because of the passage of time and the amount of resources necessary to investigate a "closed contract." The question today is whether the Union's claims must be dismissed with prejudice, as Farfield urges, because the Department of Labor declined the referral.
Farfield's arguments we must dismiss the Union's amended complaint with prejudice fall generally into two categories: first, Farfield appears to make-although *284not articulated as such-a res judicata or law of the case argument contending Judge Stengel "already ruled" the misclassification issue must be decided by the Department of Labor because "the Court is ill-equipped to resolve it" and because the Department has "exclusive authority" over the classification issue requiring us to now dismiss the case; and, second, the Department of Labor's Letter demonstrates it investigated Farfield's compliance with the Davis-Bacon Act in Fall 2004 and found no misclassification leading the Department to now conclude it will not "re-investigate" Farfield, another reason why we should now dismiss the case.
The September 26, 2017 stay.
Farfield contends the court: "already ruled" the misclassification issue should be decided by the Department of Labor "because the Court is ill-equipped to resolve it"; "already determined" the Department has "exclusive authority" over complex worker classification issues "necessitate[ing] deference to the DOL," suggesting preemption of False Claims Act claims by the Davis-Bacon Act; and expressed concern for the "substantial danger of inconsistent rulings."
Farfield argues the court's reasoning for referring the classification issues to the Department of Labor under the primary jurisdiction doctrine means, a fortiori , the matter must be dismissed with prejudice because the Department declined to take the referral. But the court's analysis arose in the context of whether the primary jurisdiction doctrine is applicable in the first instance; its decision did not address the effect of the Department's declination of the referral and it did not hold it lacked subject matter jurisdiction if the Department would not, or could not, take the referral.
Farfield does not provide us with authority, nor could we find any, holding the effect of an agency's refusal-for whatever reason-to accept a referral under the primary jurisdiction doctrine requires a federal court to dismiss the matter with prejudice as "nonjusticiable."
The Court of Appeals recognized the definition of "natural" on cosmetic product labels is " 'a particularly complicated issue that Congress has committed to the FDA' " and "[o]btaining expert advice from that agency would help ensure uniformity in administration of the comprehensive regulatory regime established by the FDCA."
On remand, the district court addressed defendants' motion to stay.
We are also guided by a recent case from the United States District Court for the Southern District of New York lifting a stay in a multi-district litigation challenging the terms "all natural" and "non-GMO" on food labels.
*287[there is] no telling when the FDA [would] complete its work on the term 'natural,' must less provide any public guidance on its progress."
In another recent case, the United States District Court for the District of Connecticut denied a motion to dismiss or stay a case under the primary jurisdiction doctrine in a matter challenging the term "spring water" used in labeling.
We find these cases analogous and are persuaded by their reasoning. In the absence of agency action in those cases, courts either lifted a stay or refused to apply the primary jurisdiction doctrine based on evidence in the record of agency inaction on matters within its authority. We too are faced with no agency action in the Department of Labor's Letter declining the referral.
Farfield recognizes the "natural" cosmetic labeling cases from California's district courts holding futility of a referral, but contends those cases are distinguishable. Farfield first argues the Food and Drug Administration is "uninterested in weighing in" on the issue while the Department of Labor, by contrast, "routinely audits Davis-Bacon Act projects and worker classifications and rules on questions of misclassification."
The Department of Labor's Letter.
Farfield additionally argues the Department of Labor's Letter demonstrates we should grant its motion to dismiss with prejudice the Union's amended complaint. Farfield contends the Department of Labor's Letter "confirmed" its audit in the Fall of 2004 did "not result in any finding of misclassification."
Farfield additionally argues the Letter demonstrates the Department of Labor "made clear that it was not incapable of determining the complex classifications; rather it was unwilling," and "exercised its discretion and decided that this matter did not warrant a new investigation into the Davis-Bacon labor standards on the SEPTA Wayne Junction Project."
We find this again misperceives the issue. The issue is not whether the primary jurisdiction doctrine applies; Judge Stengel already ruled it did. The issue is the effect of the Department of Labor's declination of the referral. At the time Judge Stengel analyzed whether the primary jurisdiction doctrine should apply, referral had not been made to the Department of Labor. Neither Judge Stengel nor the parties knew the Department of Labor would decline the referral. We now know the Department declined the referral based on-according to Farfield-its "unwillingness" to "re-investigate." We are left to wonder how there is any danger of "inconsistent rulings" when the Department is not interested in resolving this issue. If, as Farfield argues, the Department of Labor "already investigated the same issues during its 2004 audit, and the audit did not result in any finding that Farfield misclassified its employees," where is the danger of an inconsistent ruling? If the Department of Labor's 2004 audit is so conclusive, we anticipate Farfield will argue it at summary judgment.
Finally, if we accept Farfield's argument, the Union is out of a remedy both here and in the agency. Farfield provides us with no authority, and we can find none, to support such a result. Accepting Farfield's argument, any time an administrative agency declines to take a referral under the primary jurisdiction doctrine, a litigant would be out-of-court and without *289a remedy in any venue. The primary jurisdiction doctrine is one of judicial abstention in deference to the agency administering the regulatory scheme; it does not divest the federal courts of jurisdiction. And where the agency, whether by inaction, inability, or unwillingness, does not determine an issue within its expertise, the reasons for a court's stay of an action pending referral to the agency under the primary jurisdiction doctrine no longer exists.
C. We decline dismissing this action based on the Union's alleged "contempt" for the Court's referral order or its alleged "unclean hands."
Farfield argues we should not "excuse" the Union's "utter contempt" for Judge Stengel's September 26, 2017 Order referring the matter to the Department of Labor and we should "tak[e] into account" the Union's contempt when ruling on the motion to dismiss. Farfield also urges us to dismiss the amended complaint because the Union "mislead[ ] the Court about whether this case involves issues of complex classification ..."
While we are not pleased with the Union's inexplicable fourteen-month delay in making a referral to the Department of Labor made only after our request for a status update and another order directing it to make a referral, it is not a basis to dismiss the action under Rule 12(b)(6). Its inaction may prejudice its trial presentation but it created this delay.
III. Conclusion
We deny Farfield's motion in the accompanying Order. As the parties have invested years into discovery, we will promptly set a trial date.
40 U.S.C. § 276a et seq. The Davis-Bacon Act applies to "contractors and subcontractors performing work on federally funded or assisted contracts in excess of $2,000 for the construction, alteration, or repair of public buildings or public works. Davis-Bacon Act contractors and subcontractors must pay their laborers and mechanics no less than the locally prevailing wages and fringe benefits for corresponding work on similar projects in the area." Askew v. R.L. Reppert Inc. ,
ECF Doc. Nos. 16, 17, 30. Although it declined to intervene, the United States remains a party in interest.
Amended Complaint at ¶¶ 2-9 (ECF Doc. No. 30). The five projects are: Girard Avenue Infrastructure Renewal Project ("Girard Project"), PATCO Egress Lighting Project ("PATCO Project"), SEPTA Project 5004, Wayne Junction to Glenside and Signal Project ("Wayne Junction Project"), and SEPTA Project 5004, Smart Stations Project I and II ("SEPTA Projects"). ECF Doc. No. 30 at ¶ 14. Although not entirely clear when or where it narrowed its claims, it appears the Union now limits its claims solely to alleged violations on the Wayne Junction Project between 2001 and 2007. See ECF Doc. No. 165 at 1 (Union's argument if we dismiss the matter, "the workers on the Wayne Junction project" will be left without a remedy in any venue).
ECF Doc. No. 30 at ¶ 125.
ECF Doc. No. 30 at ¶¶ 32-35, 36.dd. The Union alleges the Davis-Bacon Act required Farfield to pay prevailing wages to its workers and to submit certified payrolls and "Certificate of Compliance" to SEPTA and PATCO on a weekly basis which in turn were submitted to the Federal Transit Administration.
ECF Doc. No. 35.
ECF Doc. No. 35-1 at 11-13. Farfield additionally argued the False Claims Act does not apply to the contracts at issue; three of the five contracts at issue were the subject of a prior civil money penalty proceeding initiated by the Department of Labor divesting the court of subject matter jurisdiction; and the amended complaint fails to meet the pleading requirements of Fed.R.Civ.P. 8 and the heightened pleading standard for fraud. Farfield's current motion to dismiss does not raise these additional arguments. See ECF Doc. No. 162-1.
ECF Doc. No. 41 at 7-10.
ECF Doc. No. 41 at 7-8.
United States ex rel. Int'l B Bhd. of Elec. Workers, Local Union No. 98 v. The Farfield Co. , No. 09-4230,
Id. at *5.
Id. at * 5 (quoting Charvat v. EchoStar Satellite, LLC ,
Id. at *7.
Id. at * 6.
ECF Doc. No. 136.
ECF Doc. No. 137.
ECF Doc. No. 137 at 5.
ECF Doc. No. 138.
United States ex rel. Int'l Bhd. of Elec. Workers, Local Union No. 98 v. The Farfield Co. , No. 09-4230,
Upon Judge Stengel's retirement, this case was reassigned to The Honorable Joseph F. Leeson, Jr. and then to our calendar. ECF Doc. Nos. 144, 146.
ECF Doc. No. 149.
ECF Doc. No. 150.
ECF Doc. No. 152.
ECF Doc. No. 154.
ECF Doc. No. 155.
ECF Doc. No. 156.
ECF Doc. No. 157.
ECF Doc. No. 160.
ECF Doc No. 160-1.
In September 2004, the Department of Labor audited Farfield's practices under the Davis-Bacon Act and other federal statutes after Farfield completed three of the five projects; the Girard Project, the PATCO Project, and the Wayne Junction Project. Farfield II ,
ECF Doc. No. 160-1.
ECF Doc. No. 161.
ECF Doc. No. 162.
ECF Doc. Nos. 163, 165. We granted the Union's motion and removed the case from our suspense docket and returned it the active trial docket. ECF Doc. No. 164.
Robles v. Domino's Pizza, LLC ,
Baykeeper v. NL Indus. ,
Robles ,
Erie Ins. Exchange ex rel. Beltz v. Stover ,
Farfield II ,
Id. at *4, n.10 (citing Ferrare v. IDT Energy, Inc. , No. 14-4658,
ECF Doc. No. 162-1 at 2-5.
For the same reason, Farfield's reliance upon DynCorp, Inc. is inapposite. We agree with the district court, and consistent with its reasoning, directed referral. But we are now at a different stage. In DynCorp , the court reviewed a False Claims Act claim under the Davis-Bacon Act. The court addressed whether the relator's claim alleging DynCorp intentionally misclassified, and thus underpaid, certain worker on projects billed to the Army violated the False Claims Act. The court granted summary judgment in favor of DynCorp because "it is impossible to determine whether DynCorp submitted a false claim to the government without first determining whether DynCorp actually misclassified an employee," and the "responsibility for resolving such disputes rests not with the courts, but with the Department of Labor." DynCorp ,
Farfield II ,
Farfield cites In re N.J. Title Ins. Litig. ,
The nonjusticiability argument derived from the filed rate doctrine is inapplicable here. Farfield does not provide us with authority importing the "nonjusticiability strand" of the filed rate doctrine into a primary jurisdiction analysis.
Astiana v. Hain Celestial Grp., Inc., No. 11-6342,
Id. at * 2.
In re: Kind LLC "Healthy and All Natural" Litigation , No. 15-2645,
Id. at *1.
Id. at *4.
Patane v. Nestlé Waters N. Am., Inc. ,
ECF Doc. No. 154-2 at 6.
Astiana ,
ECF Doc. No. 154-2 at 6, n. 3.
See e.g., Kane v. Chobani, LLC ,
ECF Doc. No. 162-1 at 2.
Id. at 2, 4.
Reference
- Full Case Name
- UNITED STATES of America, EX REL. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION NO. 98 v. The FARFIELD COMPANY
- Cited By
- 1 case
- Status
- Published